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[Tvoivozhd <tvoivozd AT infionline.net>]

The old saw, "the power to tax is the power to destroy" is often 
repeated, and of course quite true if restraint by government is not 
practiced.

But reality is drowned if we are focussed on that power alone---equally 
important is that civilization rests on the power to tax AND enforcing 
tax collection---to pay for all the myriad activities of Federal, State 
and Local government.

I might add that it is an idle dream to even think about small 
government for a big country---that's like seating a 375 pound Chicago 
Bear fullback on your Aunt Tillie's dainty teatable chair. It would 
immediately collapse. Any expectation it would do otherwise is an 
expression of wishful thinking, not intelligent analysis. .

The United States suffers from the fact that tax evaders now control 
Congress and the White House, so the tax load is increasing being 
transferred from , as Republican Teddy Roosevelt used to put it, 
"Malefactors of Great Wealth", to the Middle Class, to the Poor, and by 
the Greatest Borrower Of All, to our grandchildren and their 
grandchildren.. That's Old Hat too--hereditary non-working aristocracies 
evidentally have a higher birth rate than the workers who actually 
produce wealth---a good illustration being the House of Saud, where the 
inherent instability of an inverted social and economic pyramid is 
causing Saudi society to wobble about before its final and inevitable crash.

The United States is not entirely alone in this respect---the 
theoretical imposition of taxes is easy, collection of them is not, and 
equitable collection supemely difficult, due to individual ingenuity, 
and the collective efforts of the Tax Evaders Guild.

Interesting aside, India is going through re-ordering of its tax and tax 
collection system---and it looks like they might do a better job of it 
than the United States---we'll see.
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Tax evaders reel under Kelkar’s TIN

TIN: System makes verification easy, collection jumps 69 per cent
RAHUL PATHAK 
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Posted online: Saturday, September 25, 2004 at 0107 hours IST

*NEW DELHI, SEPTEMBER 24: *While observers wonder where Finance Minister 
P. Chidambaram will find the money for all the expensive measures needed 
to fight inflation and nurture the CMP, Vijay Kelkar may have left him a 
parting gift: A system designed to nail tax dodgers and force people to 
pay their part.

Acutely aware that many tax-payers were exploiting the cumbersome, 
paper-based regime and getting away with paying next to nothing, Kelkar 
has suggested an electronic system to flag discrepancies.



The Tax Information Network became operational this year and the TIN 
effect is now being felt. This fiscal, between April 1 and September 17, 
around Rs 21,158 crore was collected as income tax, compared to Rs 
12,534 crore last year, period on period — an increase of 69 per cent.

Similarly, corporate tax collection increased 33 per cent while the 
total direct tax collection has risen from Rs 25,982 crore to Rs 38,364 
crore this fiscal — a jump of 48 per cent. And it is no accident. After 
all, TIN keeps tabs on direct taxes.

T. Koshy, senior vice-president, National Securities Depository Limited 
(NSDL), which helped launch TIN, told /The Indian Express/, the new 
system was plugging all loopholes tax-dodgers would exploit.

In the paper regime, he said, companies deducted their employees’ tax at 
source, deposited it in a bank and got a challan from the bank for the 
taxman. The bank did not know how much money was really collected from 
the employees, while the employees did not know whether the money 
deducted from their salaries had actually been deposited. And challans 
could be faked. ‘‘The bigger companies would submit tax documents by the 
truckload,’’ said Koshy. ‘‘Forget cross-checking. Imagine how hard it 
was to check this”.

Starting July, banks have started giving out information on all their 
tax collections to a central database. This can electronically be 
cross-checked against information supplied by employers. Similarly, 
employers are submitting details about their tax deductions on CDs, 
including their employees’ permanent account number (PAN).

Everything can be reconciled and cross-checked electronically. The 
results are starting to tell. Next year, tax statements will be uploaded 
every quarter and examined more frequently. The smile on FM’s face will 
get wider.



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