This refers to the article "On the money trail and savings rate" (The Hindu Business Line, April 28). Given the firm stand of the Finance Minister, it is almost certain that the tax will be introduced in some form or the other, either restructured or amended.

As individual transactions are mostly reflected in income tax returns, the black money theory is not credit-worthy. Also, it is known that those who deal in black money do not transact through banks. So the transaction tax seems targeted at depositors who save through legal channels. It may also be a blow to banks as many may opt to close their accounts and turn to post-offices.

The Finance Minister seems to have bypassed a very important concept, that taxation is not an alternative to unearthing black money. Taxation measures are binding only on those who hold and transact in white money. The idea needs revisiting.

C. P. Velayudhan Nair


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(This article was published in the Business Line print edition dated April 29, 2005)
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