Black Money Essays with outlines

Black Money Essays Outlines:

1. A big hurdle to the speedy development of our economy. Black money is obstructing the speedy development of our economy and is posing a threat to its stability.

2. Generation of black money. (a) sale of fixed assets; (b) sale of scrap; (c) sale of raw materials; (d) sale of industrial manufacturing licenses; (e) over-invoicing purchase bills; (f) smuggling foreign items into the country; (g) placing on the payrolls of a company relatives who are not tax-payers.

3. “Law of motion” governing black money. Returns on white money are poor and slow but the returns on black money are very high and fast.

4. Steps taken by the Government to check the generation of black money. (a) Physical verification of the assets being sold; (b) proper record for the sale of scrap; (c) Government approval for transfer of licenses and delicensing of most of the industries; (d) payments for purchases and expenses over Rs.2,500 not allowed in cash; (e) acquisition of property transacted below the market value; (f) anti-smuggling laws; (g) voluntary disclosure of black money; (h) demonetization of thousand rupee notes; (i) lifting of the ban on company donations to political parties.

5. Inefficacy of the steps taken, suggestions. (a) nationalization and reduction of excise and custom duties; (b) simplification of tax structure; (c) removal of price control; (d) indexation of income tax rates; (e) relaxation in rent control laws; (f) vigil on corrupt politicians and officials.

Black Money Essays with outlines

It is a well-recognized fact that there exists in Pakistan a parallel economy based entirely on black money transactions. Black money, also described as tainted money, has seeped into every walk of life and is posing a great threat to the stability of our real economy. The most unfortunate aspect is that it has come to be accepted as a normal fact of life. People hardly feel any qualms of conscience while dealing with it. In their jaundiced eyes, AU the black appears to be bright and beautiful. Our businessmen employ very ingenious methods to generate black money, since it is black money which is the backbone of their business activities.

Large amounts of black money can be generated through the sale of fixed assets and scrap. Sometimes influential firms obtain quotas or import licenses in excess of their actual requirements and sell them at cash premiums. Industrial manufacturing licenses are similarly obtained through influence and sold to a second party at an enhanced value. Purchase bills are over invoiced or dummy bills are prepared. Large-scale smuggling of gold and various luxury items are important sources of black money. Smuggling of gold is no longer as profitable as it used to be but luxury items still continue to be the craze of the people. Smuggling deals entirely in black money and the money thus earned is ploughed back into smuggling or similar illegal trades. Sometimes, relatives whose income is not taxable are kept on the payrolls of a be company; they are paid their salary which is taken back in the form of black money. If any of these means are rendered ineffective by the Government, other equally clever means are soon discovered and the trade dealing in tainted money grows on.

The laws governing the movements of black money exhibit peculiar trends. Returns on white money investments are discouragingly poor and slow. But black money multiplies at a fantastic rate. Returns on black money investments are often to the order of 200 to 300 percent. Since money generated is re-invested in such activities as hoarding and smuggling, it fetches still higher returns. Once black money is converted into black wealth, it is very difficult to track it down. Since the government is quite conscious of the menace of black money, it has been from time to time, taking steps to prevent its generation. In January 1976 the Government imposed a statutory obligation on the management to carry out physical verification of its assets to the satisfaction of the auditors to ensure that no black money is created through the sale of fixed assets. The management is also obliged to maintain a proper record of the sale of scrap. Licenses are now issued only to actual users and they have to certify that they themselves consumed the raw materials imported by them.

Most of the industries have been delicensed and in other cases, licenses can be transferred only with the prior approval of the Government. Payments for purchases and expenses over Rs. 2,500 are not allowed in cash. The Government has now the right of acquiring any immovable property by paying 15 per cent above the value mentioned in the instrument of transfer if it is suspected that the property has been transacted below the market 10 value. Huge amounts of money were unearthed through the Voluntary Disclosure Scheme. Thousand-rupee notes were demonetized. Anti-smuggling laws were made more stringent. In 1985, a ban on company donations to political parties was also lifted. Thus legislative measures.

But the ingenuity and astuteness of the dealers in black money is just marvelous and they succeed in punching fresh loopholes. The Government’s thrust has so far been in the wrong direction. The economic measures that have been taken are primarily aimed at unearthing black money. Something more meaningful and effective should be done to prevent the generation of black money. The remedial measures suggested by the National Institute of Public Finance and Policy include rationalization and reduction of excise and custom duties which encourage smuggling and simplification of the tax structure. The institute has also suggested removal of price controls, indexation of the income-tax rates to neutralize the effect of inflation and relaxation in rent control laws.

These measures, if sincerely implemented, should prove quite effective. But the Government should also keep a strict vigil on the corrupt politicians and officials. The widespread impression that in Pakistan one can do anything and get away with it must be removed. This can be done only if corruption is weeded out at the top.(Tainted – polluted; Ingenious – clever, Evasion – the act of evading)

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