Black Tax Economy

 

Black Money is money earned by an individual or a citizen without the knowledge of the government of his country! White money is what he earns with the knowledge of his government and pays tax for.

 

Similarly, Black Tax is that income which the government gets without the knowledge of the common man of their country! While the white tax is the one that the government collects directly from its citizens.

 

You may be wondering, is there any income that the government might get beyond the known taxes. Yes, there are many that would of course, be brought under the accounts but might be pretty far from proper utilization!

 

Black Tax, like black money, is very harmful for the economy, in the sense that it generates black money; it is the source of creation of inequality; using this the government misappropriates public wealth which could go to anybody’s kitty and so on. In short, many activities that have negative connotations have their beginnings in Black Taxes!

 

So, let us take a quick look at some of these Black Taxes.

 

Broadly, these black taxes fall under three main categories.

 

One, Government forces you to pay certain payments for your own good! Well, taxes are also collected for people’s good. These amounts are generally collected under a different guise while part of it serves the purpose intended, the rest would go into government kitty and there would be no one to question its whereabouts.

 

Example: Provident Fund. Money is collected by the government, forced through an act, exactly as in the case of a tax. Collected money is refunded with interest, if ‘claimed by the beneficiary’ after a long time! What percentage is not claimed? Every year huge amount of money lies as unclaimed. What does the government do? Continuous to use that unclaimed money beyond a dormant period without paying any interest!

 

A few years back, government passed an Act to appropriate PF money after seven years of dormancy. A few people in Bangalore woke up to this misappropriation and raised lots of noise. Eventually, GoI withdrew the Act! Make no mistake. Government will eventually, stealthily pass an act or order to misappropriate. If not this government, the next government. Governments across the world do this, not just this one!

 

Well, PF is just one of them. There are many pension schemes which most often end up filling the coffers of the government and does not reach back the pockets of the subscribers. When you don’t pay the tax, they will come to your home and collect. If they will have to pay back the money collected, you will have to remember to claim! They will not even send you a reminder to pay the money back! There is no responsibility there.

 

Second source of black tax are the many auctions that happen in the guise of selling resources. Telecom spectrum is a typical example. The spectrum is sold at a forbidding price level which itself creates unequal market at one end and at the other, it is again collected from the common man and paid to the government. Let us take that 2G scam. Suppose as said by the then CAG, the spectrum was auctioned for, let us say, 1,75,000 crores, who would have paid this money? We the users of the spectrum would have paid this money, as call charges. What was 10 paise to 30 paise a call would have become Rs.1/- or 2/- in order to pay the government, its share of 1,75,000/- crores of this business!

 

That is, the government is collecting this money indirectly and unknown to the citizen from the citizen’s pocket!

 

There are a number of such auctioned resources, charges for which are collected by the government and paid for by the common man, as he pays a tax! Examples would be Ports, importation terminals, airports, coal mines, iron mines, tree felling in the forests and thousands of others. In all these places, the government collects a concessionaire charges which are eventually charged on the people, the common man!

 

Third kind of black tax is possibly the blackest of them all!

 

Let me start with an example.

 

In 2010, a fund called Power System Development Fund was created and charges were levied when power gets transmitted over state boundaries. These collections were to be employed later in developing infrastructure to provide transmission systems across the country. A rough estimate fixes the amount collected by PSDF since its inception in 2010 to about Rs.1.5 lakh Crores!

 

A whooping sum that is yet to be utilized and lies idle! Lies idle? Who takes the interest part of it? Even at 3% interest, this would have generated about 4,000 crores every year!

 

There are many funds like this created for a specific purpose and used by the government finally for its own objectives, ignoring the original agenda since it would have become irrelevant.

 

Many examples can be cited. 1962 China War fund created out of the Income tax cess and collections done from well-meaning citizen’s contributions. What was it employed on? Of course, the latest is the PM CARES, literally the money went to the kitty of the ruling party!

 

Many collections, either for a special purpose or for a mission, is collected from the common man who believes that the government does good. But unfortunately, is taken for a ride.

 

All these are examples of Black Taxes collected by the government in multiple formats. Apart from these, the government owns over 20,000 sq kms of land and buildings in many of them. Not including the forest department lands which are actually lands under custody.

 

In our hands, a prime land of two grounds would generate three to ten times income compared to the same with the government. Essentially, what it means is, there is an invisible income to the government that is not declared. Or that it is black tax. A government shop generates much lesser rental income to the government than what it does to a private owner!

 

Invisible, under-valued, misappropriation are all forms of Black Tax. Unknown but stealthily we end up paying more price for the same product so that government is enriched.