Indian industry has reportedly suggested that the government offer an amnesty to those who have stashed away money abroad to declare their assets. The very suggestion is an admission of guilt. And it comes when plutocrats in the US and Europe have urged governments to increase taxes on their incomes so that not just the working class suffers during these times of austerity. Indian business doesn’t seem to suffer from any such jolts of conscience.
But let’s leave the moral question aside. A similar scheme in 1997 helped the government pull in a one-time bonanza: an extra Rs 7,800 crore of taxes on assets disclosed. That would be around Rs 60,000 crore today, when compounded at the rate of nominal growth in gross domestic product.
The bumper 3G auction saved the government in the last fiscal. Will it be a tax amnesty scheme this time around? Maybe, but this looks less like fiscal strategy and more like clutching at straws.