Wednesday, February 05, 2020

You can only exhort the exhorted.

"The finance ministry on Wednesday unveiled details of a new scheme that could fetch the exchequer part of the Rs 9.32 trillion direct taxes under dispute and free up courts and tribunals crippled by prolonged litigation," wrote GC Prasad. "The scheme offers companies a chance to pay disputed tax arrears without interest and penalty if paid before 31 March." Brilliant strategy. Make a completely outrageous illegitimate demand on a taxpayer and then magnanimously offer to waive interest and penalties if they pay up before a certain date. What is to stop tax officials making a similar demand the next year to meet unrealistic targets set on them by a rapacious government? Despite offering to cut corporate taxes by 10%, if companies gave up their exemptions, such as depreciation, tax officials were exhorted to meet targets set on them in the budget. Even Prime Minister Narendra Modi weighed in. "Through a video conference on Dec 16, officials were exhorted to meet the direct tax mop-up target of Rs 13.4 lakh crore ($187 billion), a government official told reporters. Collection in the eight months to November grew at 5% from a year earlier, against the desired 17%." Vodafone has agreed to be part of the scheme, with conditions. "Vodafone group CEO Nick Read said Wednesday the UK telco's Indian JV has sought waiver of interest and penalties on its adjusted gross revenues (AGR) dues and wants to pay the principal over 10 years with a two-year moratorium. Read reiterated that his company won't infuse any fresh capital into loss-making Vodafone Idea and once again described the situation in India as critical." Blackmail versus blackmail. Give us what we want or the company dies with loss of thousands of jobs. Bilateral investment treaties (BITs) incorporate a protection for investors known as investor-State dispute settlement (ISDS), wrote Prof Prabhash Ranjan. "In the last few years, more than 20 ISDS claims have been brought against India by different foreign investors challenging a wide gamut of actions such as the imposition of taxes retrospectively, cancellation of spectrum licenses and withdrawing tax concessions." "The central government is reportedly working on a new law to safeguard foreign investment." What if the next government changes the law? Companies have to comply with a 'bewildering' 6,796 compliance items when setting up manufacturing units, found Economic Survey 2020 (ES2020). More documents are needed to open a restaurant than to buy a gun, said ES2020, and processes for imports are easier than those for exports. "Come and invest in India," said Modi. "You will also find talent, infrastructure, favorable policy initiative and security of investment." Modi may exhort foreign funds but they have "teams of macroeconomists studying India", wrote Prof Shruti Rajagopalan. Citizens are a captive audience, foreigners are free. They cannot be exhorted. 

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