Published: Tuesday, Jan 25, 2011, 1:31 IST
By Harish Gupta | Place: New Delhi | Agency: DNA
http://www.dnaindia.com/money/report_govt-to-detail-position-on-black-money-today_1498774
The heat over black money is intensifying, with finance minister Pranab Mukherjee set to detail the UPA government’s Herculean efforts to bring back the billions stashed away in Swiss banks and other tax havens by Indians.
Mukherjee, who is expected to release a ‘status paper’ on this issue at a press conference today, is also likely to indicate the administrative and legislative steps being taken by the government to deal with the growing menace.
According to a recently published report by Ford Foundation, between 2000 and 2008, as much as $104 billion of black money moved out of the country, into various tax havens. Together with China ($2.18 trillion), Malaysia ($291 billion), Philippines ($109 billion) and Indonesia ($104 billion), this accounted for 96.5% of total flows of illicit capital from Asia and 44.9% of flows out of all developing countries.
“Illicit flows involve capital that is illegally earned, transferred, or utilised and covers all unrecorded private financial outflows that drive the accumulation of foreign assets by residents in contravention of applicable capital controls and regulatory frameworks. Hence, illicit flows may involve capital earned through legitimate means such as the profits of a legitimate business. It is the transfer abroad of that profit in violation of applicable laws (such as non-payment of applicable corporate taxes or breaking of exchange control regulations) that makes the outflows illicit,” says the report.
With the UPA government under attack from various quarters, including the Supreme Court, NGOs, Parliament’s standing committee on finance and the Opposition, for doing precious little to bring back the thousands and thousands of crores, Prime Minister Manmohan Singh has directed Mukherjee to tell the nation what his ministry and the government had done in this regard.
In fact, the standing committee on finance, headed by former finance minister Yashwant Sinha, is holding its meeting on January 27 on black money stashed abroad.
Sources in the government say the Prime Minister is extremely worried over the political fallouts of the black money issue as it may take an emotive turn too.
The press conference, the first in the series, is part of this campaign.
The government is expected to tighten foreign investment into Indian equity market through the participatory notes route by making it mandatory to disclose the original investor’s name. As such, most of the unaccounted money finds its way into the shares/ commodities/ real estate markets.
Mukherjee is also likely to come out with the status report of treaties and agreements signed with foreign governments including tax-haven countries. He is likely to list out around 80 countries, including 10 tax-havens, with which India has either signed agreements or is in the process of doing so.
He has to devise a strategy to prevent generation of black money, its outflow and accordingly tighten the regulatory and tax framework.
That’s going to be easier said than done. It is no secret that barring Swiss bank UBS, which buckled under US pressure and divulged the names of 2,000-odd American citizens, no tax-haven country has volunteered any information so far.
By Harish Gupta | Place: New Delhi | Agency: DNA
http://www.dnaindia.com/money/report_govt-to-detail-position-on-black-money-today_1498774
The heat over black money is intensifying, with finance minister Pranab Mukherjee set to detail the UPA government’s Herculean efforts to bring back the billions stashed away in Swiss banks and other tax havens by Indians.
Mukherjee, who is expected to release a ‘status paper’ on this issue at a press conference today, is also likely to indicate the administrative and legislative steps being taken by the government to deal with the growing menace.
According to a recently published report by Ford Foundation, between 2000 and 2008, as much as $104 billion of black money moved out of the country, into various tax havens. Together with China ($2.18 trillion), Malaysia ($291 billion), Philippines ($109 billion) and Indonesia ($104 billion), this accounted for 96.5% of total flows of illicit capital from Asia and 44.9% of flows out of all developing countries.
“Illicit flows involve capital that is illegally earned, transferred, or utilised and covers all unrecorded private financial outflows that drive the accumulation of foreign assets by residents in contravention of applicable capital controls and regulatory frameworks. Hence, illicit flows may involve capital earned through legitimate means such as the profits of a legitimate business. It is the transfer abroad of that profit in violation of applicable laws (such as non-payment of applicable corporate taxes or breaking of exchange control regulations) that makes the outflows illicit,” says the report.
With the UPA government under attack from various quarters, including the Supreme Court, NGOs, Parliament’s standing committee on finance and the Opposition, for doing precious little to bring back the thousands and thousands of crores, Prime Minister Manmohan Singh has directed Mukherjee to tell the nation what his ministry and the government had done in this regard.
In fact, the standing committee on finance, headed by former finance minister Yashwant Sinha, is holding its meeting on January 27 on black money stashed abroad.
Sources in the government say the Prime Minister is extremely worried over the political fallouts of the black money issue as it may take an emotive turn too.
The press conference, the first in the series, is part of this campaign.
The government is expected to tighten foreign investment into Indian equity market through the participatory notes route by making it mandatory to disclose the original investor’s name. As such, most of the unaccounted money finds its way into the shares/ commodities/ real estate markets.
Mukherjee is also likely to come out with the status report of treaties and agreements signed with foreign governments including tax-haven countries. He is likely to list out around 80 countries, including 10 tax-havens, with which India has either signed agreements or is in the process of doing so.
He has to devise a strategy to prevent generation of black money, its outflow and accordingly tighten the regulatory and tax framework.
That’s going to be easier said than done. It is no secret that barring Swiss bank UBS, which buckled under US pressure and divulged the names of 2,000-odd American citizens, no tax-haven country has volunteered any information so far.
