Will big tax push work

There are two types of Indians: those who pay personal income-tax and those who don’t. The latter are in a huge majority, as around 55 million of a 1.3-billion populace pay taxes. In a carrot-and stick move, the government is trying to make the most of its September 30 deadline to convince black money hoarders that it’s better to reveal hidden income. Coming clean was best, said both Prime Minister Narendra Modi and finance minister Arun Jaitley. The question is: will the threats of sending evaders to jail after the deadline force the hands of non-payers

Given Indians’ record of cheating on taxes for decades despite several voluntary income disclosure schemes to mop up revenue and widen the tax net, it remains to be seen if the response will be as positive as the government hopes. Mr Jaitley noted India has “extremely moderate income-tax rates” compared to the developed world, but then those nations offer citizens medical care and a comprehensive social and welfare net India doesn’t.

Traditionally, real estate, jewellery and filmmaking are among the hundreds of trades and businesses run on a cash basis for so long that it is difficult to change things overnight. It’s the salary-earning middle class individual who is forced to be 100 per cent honest, while the needle of suspicion points at everyone else. Also, cheating on taxes is a game played for years by Indians who have perfected the art of evasion. It may take more than the threat of jail to squeeze tax-paying honesty out of Indians.