TAX SHELTERS: HOW ITS AFFECTING INDIA’S ECONOMY
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There are traditional and nontraditional ways to get revenues from State citizens, with taxes being the traditional way and signing an international agreement, Organization for Economic Cooperation and Development’s Multilateral Convention on Mutual Administrative Assistance in Tax Matters, with Switzerland being the nontraditional way. It appears, based upon figures that were gathered by the Global Financial Integrity think tank that Indians have been stocking away cash in the amount of $468 billion between 1948-2008. [Information obtained from the Hindustan Times.com, New Delhi/Geneva, October 15, 2013, “Swiss sign pact to share black money info with India,” Writer not identified]
Based upon that large figure it’s no wonder countries like India are asking the Swiss for help in tracking down its countrymen/countrywomen actual wealth as a means to booster its flagging balance sheet. India commissioned a study in 2011 to ascertain just how much money was not being reported as income by its citizens and although not yet published it is estimated that that figure is close to 30% of that country’s GDP! [Information obtained from the Hindustan Times.com, New Delhi/Geneva, October 15, 2013, “Swiss sign pact to share black money info with India,” Writer not identified]
Maybe the reason that India is working so hard to track down assets that are hidden away in a country that used to be known more for its Alps than for its banking policies is based upon what Glenn Levine, Senior economist at Moody’s, believes which is that it will take more than two years for India to see 8% growth with India realizing a 6.5% growth rate in the second half of 2015 since the bottoming out of its economy. He feels confident that India’s economy is slowing turning around “as the government has been actively trying to restart stalled investment projects, both from the public and private sectors.” Mr. Levine blamed India’s past three years of slow growth on “Weak investment and consumer demand,” which would cause any State to look for revenues in places that it would normally not look in order to keep its economy in the black. [Information obtained from MoneyControl.com, October 17, 2013, “Gone are the days of 8% growth: Moody’s on India,” Writer not identified]
Are Indians failing to report their true assets by hiding their personnel wealth in Switzerland while coming clean on their corporate reporting? An anti-corruption watchdog Transparency International released the results of a study that it produced which rated companies in BRICS nations and found that India rated at the top of its survey due to its “relatively high standards, in a survey of emerging market multinationals.” What is fascinating about this survey is that it may demonstrate that Indians understand that good corporate governance is important to grow an economy but may not have the same sentiment when it comes supporting its government by keeping potential tax revenues from its grasp. Let’s face it, Indians are not the only group of people who are doing this, but because their State is not growing at a rate that it was three years ago it is now more noticeable. [Information obtained from MoneyControl.com, October 17, 2013, “Indian firms most transparent in BRICS, Tata tops list,” Writer not identified]
Allen Thomas
