 "Why black money disclosure comes at a price")
A study of the 12 black money disclosure schemes floated by the government since 1950 shows the additional revenue garnered has not compensated for this aggregate drop in growth rate. The mop-up window for the latest of those — Income Disclosure Scheme, 2016 — closed on September 30. It will be interesting to see when the tax receipts for the year are tabulated in the North Block, if history repeats itself.
For each of the scheme years, the income-tax (I-T) department found that the actual pace of tax collections trailed the rate of growth for the previous years. The trend is the same, except for one of those 12 anti-black money schemes.
For instance, the most popular among those, the voluntary disclosure income scheme of 1997 got the government additional tax receipts of Rs 9,729 crore. Even after adding the sum to the aggregate direct tax receipts shows a growth rate of less than 16 per cent. The year before the direct tax receipts had risen by over 24 per cent.
As the table shows, the only exception to this trend occurred in the case of Amnesty Scheme of 1985. It was a rather decentralised one where income-tax circles were given freedom to cast the instructions as they saw fit.
But, in all others, including those stretching back to 1965, the government did not come out a winner.
According to Govinda Rao, member of the 14th Finance Commission and a public finance economist, the trend is not “surprising”. “These schemes come up in those years when the government expects there will be a shortfall in revenue, to begin with”. The special drive shores up those numbers.
He says the black money angle — of cleaning up public life and removing the spectre of black money — played a secondary role in these efforts. “These were efforts to raise money in a difficult year, not to ensure avoidance of black money,” he says. According to some of the I-T department officers there is a more plebeian reason for tax growth to ease up in these years. Generally, the directions to the field formations to reach a particular target come through by early December or late November from the Central Board of Direct Taxes.
But when a special drive is launched, the tax officials say they receive the target earlier to make the scheme a success. It has happened this year, too, though the targets are conveyed orally in such cases. It is difficult for us, they argue, to achieve double targets in one year, often from the same assesses. So, the victory in the anti-black money attack often conceals a possible slowdown, later in the same financial year.
One of the reasons the Amnesty Scheme of 1985 bucked this trend was it was decentralised. The tax commissioners were given the leeway to frame the details, leaving them free to balance the receipts within the overall target for the year. The aggregate tax receipts for the year did not flag.