Economy – Tax Policy and Structure Reset .

Re-monetization would provide the country with a tremendous opportunity to generate substantial revenues for the exchequer creating the financial space for a complete reset of the Indian economy and financial management. The Policy initiatives that will be undertaken would include those stated below.

  1. On winning elections, The Rising India Party would announce a suspension of the current Tax architecture for replacement with a new, more sensitive and pragmatic one.
  2. It would urgently and immediately initiate a complete overhaul of the Tax Structure and of the architecture and functioning of the Finance Ministry that frames and oversees the country’s economy.
  3. The new Tax structure would cover the entire gamut of Direct and Indirect Taxes.
  4. The existing tax structure and laws would be scrapped and placed in suspension mode for six months till a completely new Income Tax, and other Direct and Indirect Tax architecture is announced and put in place.
  5. The Rising India Party would, by a constitutional amendment, pass the constitutional limits or Tax Ceilings.
  6. The Tax ceiling would govern the frame of the Tax Laws of any government such that there would be limits to which any government can levy taxes on the people and businesses, and governments would have to function within the limits set by the constitution.
  7. This would be done so as to permanently protect the citizens of this great and ancient civilization from tax injustices imposed by in-house governments at any time what so ever, forcing governments to become more efficient in the way they run and to cut unnecessary costs resulting from inefficiencies and a bloated bureaucracy, that currently burden the tax payer.

The proposed Tax Frame is both within the surround of our civilizational ethos and history; and logical within the modern 21st century paradigm as is in place at the moment. These Tax laws would include the following key elements:

  1. By constitutional amendment the law would set a Tax ceiling; the limit to which personal and corporate Income Tax can be levied at that of between 18.5% to 20%. The preferred best rate would be 15% if the economics of compliance and size of economy so dictate.
  2. However, in circumstances of national emergencies, additional surcharges can be levied, but these must be to and for limited timeframes.
  3. Dire national need, or financial budgetary deficits needed for the needs of society can be collected and levied as surcharges, temporarily.
  4. GST or Service taxes cannot cross 30% of a particular product group or activity and can be higher only on those from which extraordinarily high earning are collected by the manufacturers / distributors and lowest on industries with national priority export products list.
  5. The GST tax range between Zero, on products and services of critical National Security or importance to a maximum of 30% on luxury product groups or good catering to the higher socio-economic population groups.
  6. The government would have the ability to seek In-direct taxes or surcharge taxes as temporary measures to meet the needs of a given sector or otherwise so defined from time to time.
  7. Starting from year one of the rule of The Rising India Party will re-frame the goods and services tax, based on an evaluation of the current collection and budgetary picture at the time of winning election and re assess these within the downsizing of government through the exit from all industry, businesses and enterprises as stated in this Policy document and elimination of unnecessary bureaucracy.
  8. Such staff shedding will be within the proviso of active re-settling redundant staff after due assessment and evaluation of the extent to which such staff have made money via corruption, especially in departments / ministries where opportunity of, and indulgence in corruption has been endemic.
  9. Such evaluation will be based on the post Amnesty declarations by members of the bureaucracy and psychometric-polygraph assisted assessments for concerned individuals, especially those who have not declared under the amnesty scheme.
  10. The GST and other indirect tax collection rates shall be decided on a holistic evaluation of a given industry or product group and will completely re-vamp the system with the objective to bring the rates down to points which can energize the economy and make it globally competitive on a sectoral basis.
  11. If the rates of indirect taxes need to be raised over and above the maximum limits placed by the constitutional amendment, these would be permitted but need to be done with clear transparent data and reasoning placed before the public and such rises will need to be for limited time slabs only.
  12. Tax rates would be between 2.5% to 5% lower when income tax is filed as a family unit over individual filing. For example, if the Income Tax slab for an individual tax filer begins at Rs. 4 lakhs, then if a family files joint tax return on family income, and if this is over two earning members, the tax Free thresh hold would be Rs 9 lakhs instead of Rs. 8 Lakhs if it were filed as individuals. This would encourage for families to stay together and bond better and help in reinstating the family as the core support unit rather than the government.
  13. Tax slabs too would be lower by between 2.5% to 5% in case of Joint Family Filings, including and up to the maximum Tax rates.
  14. Imported Duties would be Zero on products, processes or services of critical National security areas including defense products to a maximum of 30% on products and services catering to the upper socio-economic strata of society.
  15. Additionally, import duties would be set with an eye on encouraging local industry to produce products to world standards and price points that are competitive with any country producing such products or services.
  16. Export Industries would get concessional power rates, land on low cost lease or sales on discounted rates for setting up their industries, especially if these are set up in Export Zones or in national development zones (NDZ) that would be announced.
  17. Industrial units set up in Export and NDZ Zones would gain tax breaks for both the industries and the workers who work there.
  18. All Export Zone industries would have the right to sell between 25% to 40% of its production in the local market, but on local market sales local taxes such as GST would be levied.
  19. If for market force reasons that can be proved, such units would be permitted to sell their products in the local market so as to avoid situations where the industry or unit does not fall into failure or loss mode. Such allowances would be permitted and sanctioned by Industry Audit Groups.
  20. Wealth and / or inheritance taxes would be kept to a minimum and not over 10% in any case, with 5% slab for wealth below established thresh-holds; suggested ceiling for this would be 50 crores, and the higher slab on wealth above this. Such a policy would instill confidence and encouragement for full disclosure and transparency at all times. The term Wealth Tax should be changed to Nation Build or Give Back to Nation Duty.
  21. No wealth tax would be levied on any movable assets such as family heirlooms, jewelry, gold and such that have been in the family for two generations, i.e. from grandparents on either side. These moves would encourage open transparency and disclosure by all citizens.
  22. An initiative that needs to be examined and factored into the new Economy paradigm would to consider utilization of taxes collected from an area to be first allocated to the area’s needs and using the surpluses for the central pool requirements. Thus, each tax collection area; District / Village / Tehsil etc. will be direct beneficiaries of development initiatives from tax collection from their areas.
  23. However, this would need to be conditional upon first meeting the needs of critical expenditure areas such as government salaries, defense needs and other national importance heads.
  24. To Develop: One possible substantial contributor to the nation’s tax collection could be hitherto untapped stock market wherein the well-off play. A percentage, say 1% of the total daily turnover of the market would accrue to the government under this initiative.
  25. Against the tax collected from the shareholder, could be a year-end income tax offset, and in cases where the shareholder income is below certain thresholds refunds may be considered. November 2017 turnover in crores was 16,309,363 crores. 1% of this would yield 16,30,90/- crore for the month to government coffers; no stress, no administration cost and theoretically, the ability of the market to absorb this cost.
  26. There is an element of gamble in the investments in the stock exchange and citizens can be expected to absorb the cost of their desire to make large dollops of money on the market, or pay for losses sustained. The move could also help in cooling the stock market and channeling investments to other more solid spheres of economic activity.
  27. Other Tax rationalization measures would be factored in on broader discussion and inputs from a wider section of society after this document is made public.
  28. These would include the levying of minimal tax on agriculture income from large landholders and farmers, or agriculture companies.
  29. The Rising India Party would bring innovative tax policies giving tax breaks to companies for social responsibility spending including the following:
  30. Investments in research would attract tax breaks on research spend.
  31. Tax credits on expenditure on staff insurance, pension schemes, education assistance for children of employees, medical insurance contributions would all attract tax breaks in computing taxable income.
  32. In order to encourage Indians to pay taxes commensurate with their income, the government would announce Preferred Access to government departments for tax payers. The access level would be structured according to the quantum of tax paid.
  33. Thus, high tax payers would get faster access to government policy making and implementing board groups
  34. Higher levels access for high tax payers, stepped down to lower levels, according to quantum of taxable income declared and tax paid would be the operating principle.
  35. It is the tax payer’s money that pays for the country’s budgets and it would be a huge encouragement for tax payers if they are moved up from silent sufferers to active participants in governance narrative.
  36. This idea needs to be discussed and accepted or amended on broad-based inputs from diverse group of stake holders, comprising both taxpayers and non-tax payers

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