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Commentary

Why not another black money amnesty scheme?

There’s a liquidity crisis out there, and if I may suggest something: Why not another one of those “declare your black money, pay 20% of it as tax” schemes? It’s stupid but so are bailouts, and isn’t this even better than bailouts? It’s moral hazard – yes.

The amount of black money in the country is obscene – and once we get it back mainstream, it will result in a huge cash cushion for an economy that will struggle through a recession. The tax revenue can offset the costs of a slowing economy – in part, at least – and the extra money coming in can stem a liquidity crisis of gargantuan proportions.

To ensure people don’t think such schemes will happen ever so often, the thing to do is to tighten enforcement so much that people will hesitate to have black money after this. By this I mean serious investigation into all real estate transactions, a tax-push by hiring more agents and consolidating the tracking information they have been collecting. It’s amnesty but there must be a penalty for not taking part.

This won’t help the likes of me – I have no black money because I have entirely been paid by cheque, I don’t own land or property etc. But it will take money from the mattresses back into the economy. And it will definitely help politicians 🙂

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