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CHASING BLACK MONEY ACCOUNTS ABROAD

By Anjan Roy

It began with a bang and appears to be ending with a whimper. The huge noise about cash stashed away in Swiss banks by Indians, hoodwinking the tax authorities had kept the media and the common man salivating. There was this utter glee about knowing the names of those –presumably high and mighty—who might have salted away the nation’s money. We were seeing the prospects of knowing those accursed names. The Supreme Court had admonished the government for not giving over the list that they got from authorities abroad.

 

Now the names have been handed over and yet those remain secret. There are two aspects of the whole affair around the black money hoarders list.

 

First, although the BJP had promised to make public the so-called list of black money hoarders abroad, the government itself was arguing for secrecy. When it did so, it was reprimanded by the Supreme Court. When the Supreme Court finally got the list of so-called names, it sees greater wisdom in withholding it from the public. Isn’t all this an elaborate drama, played out at different levels by different players? The public might be enticed to think that way, egged on, if for nothing, by the observations of the Supreme Court admonishing the government for dragging feet in handing over the list.

 

But that impression could be misleading. There are compulsive reasons why names could not be made public at will. The government had been saying that – not just this government but its predecessor too had stated the same. That is because you are handed over information on the ground that the names would not be made public for any other reasons than for doing justice under established procedures of law. These cannot be just released for gaining political advantages or for the sake of embarrassing individuals.

 

These are not just guarantee for good behaviour on the part of the executive. These are sine qua non for obtaining such information. The so-called lists –there are reports about multiple lists from multiple sources—on promise that these will not be misused for any other purposes. World over, efforts are on to book tax evaders. That can be an individual or a corporation. The instances of corporations dodging taxes and avoiding legitimate tax dues are becoming huge problems. Tax heavens are legitimately giving them shelters and governments are not in a position to move against them. Germany for instance had a mighty quarrel with its neighbours on this score. There are known tax heavens where individuals and corporations are getting themselves registered for enjoying tax shelters.

 

These are sought to be plugged through international efforts. Countries are agreeing to collaborate and co-operate to eliminate tax heavens. Even known tax heavens like Mauritius, St Kitts or Cayman Islands are now joining these global moves to administer tax claims against those who are earning incomes but avoiding taxes. Double taxation agreements are being re-worked to plug loopholes through which income-earners are making their way without paying taxes in any tax jurisdiction.

 

The biggest tool against this battle for capturing tax is information sharing. Countries are now agreeing under international treaties to share information they are gathering on either corporations or individuals. Currently under the aegis of the Organisation of Economic Co-operation and Development (OECD), an information sharing agreement is being finalised and countries are signing a treaty on information sharing. The guiding principle is non-disclosure of names and identities until probes have formally begun and cases established. Jumping these obligations, even under the garb of judicial activism, could damage the chances of information sharing with others. The sources will simply dry up as if India does not honour the principle of non-disclosure till cases have actually been started. Supreme Court might have given cognisance to this and withheld the names for now.

 

Second, there is a ring of naivete about the craving for a list, as if there is as if a clear list of names of Indians who have accounts in Swiss banks with the amounts of money in each name.  Even without the crumbs of information falling off from high ministerial tables, it is reasonable to surmise that mostly no such list will be available. Those who are tax dodgers are not exactly fools to keep all this money in their names in some bank accounts—Swiss or otherwise.

 

In fact, Swiss bank accounts are passé for such transactions. They have been under the lime light for too long and anyone having the least sense will not keep their ill-gotten wealth in such accounts. Fashion has shifted from Swiss accounts to other centres. Borfors investigations did not, incidentally, lead to Swiss bank accounts. These landed in St Kitts or Caymans and other places.

 

And then, stashed away funds are not kept in individual names straightaway. These are maintained in opaque forms in the name of trusts or companies which are linked in innumerable layers and through strings of apparently unrelated transfers. To track a single account would be a Herculean job and to establish perfect identity is next to impossible.

 

But then, the question is how come some names were in fact disclosed. How come the rights of those whose names have been disclosed were not observed?

 

There is apparently more in disclosure so far, than in withholding the other names in the list. Is it a game of fending off pressures and buying peace for the time being? (IPA Service)

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