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Black money: UPA government loves tax evaders
Virendra Kapoor reveals how the UPA government is tax-evader-friendly.
'Switzerland and Germany completed an accord to end a dispute over tax evasion by wealthy Germans holding cross-border accounts with Swiss banks. As per the settlement, Swiss banks will pay $2 billion Swiss francs ($2.8 billion) to the German government to cover the failure by their clients to disclose undisclosed money in the past, the Swiss finance minister said...'
The above report appeared in a couple of newspapers a few days ago. It is one hundred percent true.
The German government had been doggedly pursuing the matter of black money with its Swiss counterpart and threatened to have Switzerland blacklisted as a tax haven under an international convention.
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Black money: UPA government loves tax evaders
The Germans had started investigations last year after they laid their hands on a CD, listing explosive bank data.
Now, contrast the German response to the problem of black money in foreign tax havens with the ways India has sought to tackle the problem of black money locked up in secret bank accounts in the Swiss tax haven.
And, mind you, by all reliable estimates the amount of black money that Indians have parked in foreign tax havens is far bigger than the German citizens might have stolen from their tax system.
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Black money: UPA government loves tax evaders
However, consider the following facts:
- The United Nations Convention against Corruption was adopted by the UN General Assembly in October 2003 and came into force in December 2005 after ratification by the requisite number of States. Notably, India was not one of them;
- The Government of India ratified the Convention under duress in May 2011. It had become difficult for it to explain its refusal to do so while the Supreme Court was seized of a PIL against its failure to ferret out trillions of dollars in black money stashed away in foreign tax havens;
- Significantly, before ratifying the Convention, the Indian government took ample care to sign the Avoidance of Double Taxation Treaty with the Swiss government which essentially is meant to benefit legitimate income of licit businesses in either country;
- Most importantly, the above Treaty specifically bars the Indian government to seek any information of financial transactions in the Swiss banks prior to April 1, 2011;
- The government, while ratifying the UN Convention against Corruption, specifically said that it would seek legal assistance not under the above Convention, but under bilateral agreements (such as the one it bilaterally signed with the Swiss).
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Black money: UPA government loves tax evaders
Put simply, the Government of India signed the Convention against Corruption under intense public and judicial pressure more than five years after it had become operative.
And while so doing, it omitted the most meaty part which would have enabled it to seek information from governments in tax havens about Indians keeping black money accounts in those countries.
Most sinister was the fact that while signing the Double Taxation avoidance protocol with the Swiss authorities it pointedly, and voluntarily, surrendered the right to seek information about black money accounts opened and maintained before April 1, 2011.
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Black money: UPA government loves tax evaders
In other words, the government has provided a blanket security net to all those Indians who had stashed away hordes of black money in Swiss secret accounts before the coming into force of the Double Taxation Treaty.
Considering that there was an estimated Rs 10 lakh crore (Rs 10 trillion) of Indian money stolen and kept in foreign tax havens, the United Progressive Alliance government with one stroke of its tainted pen has granted immunity to tax-evaders who had stashed the loot in tax havens.
Also, generators and keepers of black money were not only duly alerted by the public outcry against monies stashed away in foreign tax havens.
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Black money: UPA government loves tax evaders
The Government of India most gratuitously moved the extra mile to protect their interests by enshrining in the agreement with the Swiss that it would have no right to ask any questions about secret accounts opened prior to April 1, 2011.
With such a black money-friendly agreement with the Swiss, can any moneybag have any reason to complain against 'honest' Prime Minister Manmohan Singh's government?
However, the way the Germans have pursued the tax evaders, and made the Swiss pay the requisite amount of tax on money kept by their citizens in Swiss banks is a sterling example for any government keen to unearth black money of its citizens lying in foreign tax havens.
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Black money: UPA government loves tax evaders
The Germans threatened to have Switzerland blacklisted by the Organisation for Economic Cooperation and Development.
The Swiss banks, incidentally, would deduct the entire amount of tax paid by them to the German government from the illicit accounts held in their banks by German citizens.
Meanwhile, the UPA government still refuses to disclose the names of Indians holding illegal accounts in the Liechtenstein bank which were furnished by the German government more than three years ago.
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Black money: UPA government loves tax evaders
As they say, where there is a will, there is a way. Well, the Congress-led government, clearly, lacked the will to go after those who had been stashing away billions stolen from Indian taxpayers and keeping them in foreign tax havens.
But, nonetheless we must doff our non-existent hat to Prime Minister Manmohan Singh. For, he is honest.