A foolproof system to prevent tax evasion and destroy the black money economy - An Ethmos perspective - PART III

You might be thinking by now that the Ethmos guys have gone complete nuts considering the stupid and moronic things we have been yelling and telling since the past few days about Greece, black money, financial trails, and the corruption that leads to the black money.  So just to reinforce your views, we present another piece of crap for you to think and contemplate about.

Public audit systems (PAS)

What is audit?  Audit is nothing but the checks and balances in any system in the form of re-verification and certification of any completed or ongoing work.  It is nothing but an independent view regarding the loopholes in the system as well as the improvements that can be brought about in the system.  Why is it required?  In simple terms, it is required in create a fear of accountability and serious repercussions in the head of the person who thinks of doing any mischief or who thinks that just completing the job somehow regardless of quality will do just fine.  But then, if such checks and balances are there, why is that so much corruption is existing in the country?  We believe that the audit systems presently prevailing in the country are simply inadequate to create the "threshold" limit of fear and accountability in the officials responsible for the public work.  Hence, we would like to introduce the concept of public audit systems.

So what will be this system?  The public audit system or PAS as we would like to abbreviate it will be a system by which any common man can go and verify the records of any public office.  This will be more or less an extension of the right to information act but the only addition being that in PAS, the citizen gets the right to verify the information provided by RTI.  In case of RTI, we are solely dependent on the information provided by the concerned department and the same is taken at face value.  Many a times, the RTI replies are given in an ambiguous manner so that the procedure is dragged based on stupid technicalities and it is more or less a test of the applicant's persistence and perseverance to get a clear cut reply from the government departments.

Now the question will arise that if any such system is introduced it will also lead to interruption of regular work being done by the departments and most of time will be utilized for additional audit replies for comments from the PAS audit.  And PAS audit will be apart from other internal and external audits, which will consume more time for the departments.  To overcome this problem, what we suggest is that just like the RTI cell in every organization, a PAS cell should also be created in every organization and department which will handle the PAS.  Any citizen willing to conduct a PAS will have to approach the PAS cell just like he approaches the Chief Information Officer of the concerned department for RTI.  The applicant has to clearly state which file he needs to audit and as with all our other suggestions, we suggest that the entire thing be made online so that no manual application or paper wastage is to be done for doing this and proper tracking of applications can be made.  Further it will remove the possibility of duplication of work because if one file is being audited by one entity, then at the same time, it need not be done by another person.  The results or comments of this audit will be published online and if any further queries are there, any other citizen can conduct a fresh audit or "continuation audit" of the particular file.

Receipt monitoring system (RMS):  This will be an added tool for monitoring by PAS.  Many a times, you would have got a challan from a traffic constable who would have stopped you for not wearing the helmet or "supposed" over-speeding.  After you pay the fine, the official will issue you a challan for the said amount.  Now how to determine if the amount you paid has actually been remitted to the government account?  That's where RMS comes to the fore.  RMS will be the central database of all challans issued throughout the country.  Challans should NOT be manual and have to be issued through a centralized device (like ticket issuing devices) and the database should be updated on a daily basis.  Every challan should have a unique "challan ID" which can be able to input in the RMS database and check whether the amount has been credited to the public account or not.  If you have received a challan but say after 2 days also, the challan amount is not getting reflected in the database, then there should be a functionality to inform the same online so that corrective measures can be taken and accountability fixed.

These two systems apart from the M2 machine, CETRAD, OPOF, & EUF will lead to a system wherein hiding of unaccounted money will become next to impossible for the wrongdoers.  Please note that the M2 machine deals with the overall black money economy; CETRAD, OPOF, & EUF will deals with the black money in business segment of the economy; PAS & RMS deals with the black money in the public sector/government sector; and the FTR (financial trail reports) deals with the already "corrupt rich."  We strongly believe that, if these measures are implemented, then it will become nearly impossible to store black money as cash/currency/money but again for the imaginative & creative corrupts, we give the idea of barter system!  Don't worry we will surely think of a way to overcome the "barter corruption" also - just give Ethmos some time.

Happy Ethmos to all!

A foolproof system to prevent tax evasion and destroy the black money economy - An Ethmos perspective - PART I

REMOVE BLACK CASH CAMPAIGN - ETHMOS

 BLACK MONEY

We will come straight away to the point - black money is nothing but the illegal money that is generated out of illegal means and/or on which the due tax has not been paid to the government and regarding which the government has no knowledge as to the whereabouts of this money - the primary reason being that the black money exists in HARD CASH.

But then why should we or you be concerned?  If some bloke wants to stash up cash in his bathroom or bedroom or bank lockers, why are we getting so worked up?  According to the people who earn black money, they don't want to pay tax since the government is already "looting them" by not providing proper infrastructure and not controlling rampant corruption (The people who think this do not understand that they are the fathers and progenies of this corruption!)  As far as you and we are concerned, we don't actually have any problem if anybody has kept excess cash with him/her but just consider this small "hypothetically real" situation:-  You are a middle-class tax-paying salaried individual.  You want to purchase a house.  You search for the same on the net and with the local builders and zero in on a building.  Now you approach the builder for the purchase.  At the same time, our "innocent black money stashing" bloke also approaches the same builder and incidentally for the same building that you want to purchase.  Now whom will the builder prefer?  The answer is, in majority of the cases, the preference will be given to the person who will help the builder in some "personal tax saving", i.e. by keeping his income UNaccounted to the government.  Say if the building is priced at Rs. 20 lacs, then the "black money bloke" will tell the builder that he will pay Rs. 10 lacs in cash and the rest in cheque (so that both the builder as well as he himself is not put into any trouble by the tax authorities regarding the source of funds).  Now the builder will put a condition before the "tax-paying middle-class salary-earning you" that either you pay Rs. 10 lacs in cash or else the deal is gone.  Now from where are you going to bring this Rs. 10 lacs?  Do you think any bank will finance you for evading tax by paying Rs. 10 lacs as cash?  Banks generally give loans based on the sale deed amount and around 10% to 20% of the loan amount for some furniture or interior work (which brings your loan amount to hardly Rs. 10 to 12 lacs).  Now you are either forced to take a personal loan at say around 15% rate of interest or just dig into your hard-earned savings.  So, in short, this is how the black money affects the common man and this is just a simplified example - because a person who is having excess cash with him will be willing to pay even double for any commodity or service, thereby pushing the prices upwards in the market leading to the high "on-road" inflation. 

So what is the solution?

We are proposing an extremely radical solution to this problem since the problem is extremely deep rooted in the Bhartiya economy and is further complicated with the fake notes racket being run by our neighboring hostile countries aimed at ruining our economy.  Hence, we propose TOTAL ABOLISHING of CASH from our economic system.  Instead of cash, we should use digital currency either in the form of plastic money (like debit cards, ATM cards, etc.) or what we are proposing as the M2 machine

THE M2 MACHINE AS WE IMAGINE!

(the Mobile Money Machine).  The mobile money machine will be a portable device given to each and every individual of the country by which s/he can transfer money from one entity to other (person or company or whatever) just by a few presses of the buttons.  The rationale behind this is that digitization of money will make it impossible for tax evaders to keep black money as cash because after digitization, money will be kept in the digital form in your digital wallet of the M2 machine.  Operation of the M2 machine does not require much knowledge since all the machines will come with a unique ID and all you need to know to transfer the amount to anybody is to know the unique ID of his/her M2 machine and just feed in the required amount to be transferred.  The money can either be stored digitally in the M2 itself or can be deposited in your bank account for which functionality will be given inside the machine.

How to implement this?  Many of you will be thinking that we are giving imaginative ideas straight from "Ethmos in Wonderland" but this is what we suggest for implementation of this scheme:-  You may be knowing that it is the RBI that issues the currency notes in the country and the coins are issued by the Ministry of Finance.  Let's just keep aside the coins and focus on the cash.  Every note that RBI prints has a unique serial number printed on it and we hope that RBI has kept a record of the number of notes issued with respect to a particular series.  What the people who duplicate our currency and make fake currency do is to print duplicate notes with imaginary or copied serial numbers which either do not exist or exist in duplicate form.  Hence, all we need to do is to convert this data with RBI into digitized form and keep the data safely in at least 3 to 4 data centers so that appropriate backup and data integrity is maintained.  Once the data regarding the total amount of money in our country along with the serial numbers (serial number is the most important link in this which you will understand shortly as to why) is entered, then the government can start issuing the M2 machine to the public.  The same can be done through banks as was the case with PMJBY and PMJDY schemes.

Now, say you want to purchase an item worth Rs. 20 from a grocery store.  You will pay using your M2 machine and the payment will be transferred from your machine to that of the grocery store owner's machine.  The Rs. 20/- can be either transferred as two Rs. 10/- notes, a single Rs. 20/- note, or four Rs. 5/- notes, etc. Whatever mode of payment you choose depending on the currency stored in your machine, the payment will be transferred to the other party's machine along with the serial numbers, which will enable the RBI to track each and every currency ever issued by it and to know where the total money of the country is lying.  In short, linking of serial numbers with currencies in this machine will  make it virtually impossible to duplicate the "digital currencies" since no two currencies can have the same serial number and no new serial numbers can be created by anybody except the government.  This will give the government the ultimate and absolute control over the money within the country as to how, where, and when to issue, utilize, or take away the money from the economic system.  There are a hell lot of other benefits and options available and the permutations and combinations are unlimited for this technology.

And yes, one more thing regarding the implementation - since the government has made it so easy for everyone to open a bank account, it has become easier to digitize the currency.  The public should be given 6 months' time to deposit whatever cash they have with them into their bank accounts and the cash should be deposited by the banks along with the data entry of the serial numbers into their database so that RBI can know which "serial numbers" are circulating in the market as "hard cash".  After the time line of 6 months' is complete, another extension of say 3 months can be given to the "defaulters" in order to make sure that "all the serially numbered currencies" are pumped back into the digital currency system.  Once all the deadlines are over, there should be complete ban imposed on the "hard cash" currency and no transactions whatsoever should be allowed using the same.  This will make the "hard cash" currency no more valuable than a tissue paper thus rendering all our "cash-stashing blokes" poorer by a good fortune and this cancer of black money can be removed from the system completely.

In our next article, we will focus on how black money is generated by the government departments and how to curb and destroy the same.

Till then, wishing you a very happy Ethmos.