Give them an incentive and people will pay, happily.

Milind Murugkar has written an article, in which he says that Prime Minister Narendra Modi got the idea of banning high denomination notes, known as demonetization, from a NGO, called Arthakranti, founded by one Anil Bokil. 'Artha' means 'money' and 'kranti' means 'revolution' or 'trying to proceed by subjugating others'. According to Arthakranti the only way to get rid of black money is to get rid of all notes. If every transaction has to pass through banks people will not be able to hide their incomes, and so will be forced to pay their share of income tax. Arthakranti also recommends replacing direct taxes with an indirect tax of 2% on every transaction. However, such tax will have a cascading effect on everything we buy and will be the exact opposite of the Goods and Services Tax, or GST, which the government is trying to bring in. "A government enjoying a majority support feels emboldened to disregard the advice of experts and plays with radical ideas, ignoring their long term impact. We have seen the consequences of such foolhardiness with the demonetization decision. It is a catastrophe," writes Murugkar, advising against acting without a rigorous study. It is a universal belief in India that most people avoid paying income tax. Income tax is easy to collect from salaried people, but only 20% of bread-winners are in salaried jobs. Of these, 16% are Grade IV employees, such as peons and sweepers, 1% are clerical staff and 3% are officers. Even among these lucky individuals up to 71% do not have written contract, which means they may not be working regularly. Why does the government need to raise taxes? Because 30% of the population lives below the poverty line and would suffer without government handouts. There are more than 1,000 schemes to support the poor so some are recommending a Universal Basic Income scheme. This will be easy to implement as everyone is paid the same amount and there will be no leakage as it will go straight into bank accounts. However, it will be too costly if given to every citizen so some selection of who deserves to be paid is inevitable. No one likes to pay taxes, especially in the US, but taxes are necessary to pay soldiers, police and firemen who are essential for our security. Income tax rate in India is less than that in the US and much lower compared to Sweden, Denmark or Germany. Why do Indians avoid paying tax? Because no one thinks that politicians pay their fair share and paying for their luxuries is infuriating. The most important reason for not paying income tax is that we receive nothing in return. Instead of treating us as thieves the government could allow people to pay as much as they can. Of that government will deduct, say 20%, as tax and treat the rest as investment in health insurance and old age pension. The more you pay the more you get. People will pay as much as they can, for themselves and also for family. Make it an investment.