Benefits of Arthakranti

Having got free from the present tedious tax structure, there will be a new enthusiasm in the trade and industry sector and this will create enormous opportunities for employment.

The business and industry will switchover their resources presently engaged in tax management, towards research and development relevant to their business. This will result in improvement in the quality of service and the cost competitiveness of domestic products.

As present tedious commodity oriented tax collection system is going to be replaced by "Transaction Oriented Tax Collection System", business/industry can enjoy the liberty to chalk out long-term policies for the growth of the business independently. (At present, tax pattern has built-in provisions for political/bureaucratic influence in establishment of business plans; this is an encroachment over autonomy of business/industry by the political/bureaucratic nuisance.)

Since Transaction Tax system has significant advantages over present tax system with regard to complexity and transparency, domestic manufacturing industry would get inspired to compete in the international market. This will make up the import-export imbalance, which will ultimately result in strengthening of national currency.

There would be an enormous increase in revenue and thus removal of the budgetary deficit. And, with proper management, this will lead to reduction in dependence on foreign debts; in other words, the financial crunch/debt traps can be avoided.

With ample money resource at its disposal, government can take up the long awaited infra structural development activities (e.g. roads, electricity, housing etc.).

With ample amount of money resources available as a result of Transaction Tax system, government can attempt gigantic projects for welfare of the nation. (E.g. Ganga-Cavery scheme - this scheme proposes to connect Ganga to Cauvery, which is a possible solution to floods in the north-east and the draught in the south-eastern states.) To make up for the financial requirements of such huge projects, government can moderately increase the total Transaction Tax rate (say to 3 % from 2 % used in tables above). Such a provision is to be considered for issues of national importance.

Development plans can be effectively executed due to sufficient and prompt collection of government revenue according to Transaction Tax system. Because of Transaction Tax system, presently under-developed regions of the country can be promoted for development without burdening the developed regions. This can be achieved by proper allocation of central government share of Transaction Tax (Present eleventh finance commissions tax share allocation dispute can be resolved effectively under the new system).

Because of the proposed transparent and corruption free taxation system, foreign investment would be encouraged. Businesses, which are beneficial to the nation, can be allowed and the government can prevent those not beneficial or harmful. This foreign investment would prove to be a booster to the national development.

For every transaction taking place through bank, with an independent share of central, state and local governments, each of these government levels would receive financial resources independently. This is in tune with the concept of "Panchayat Raj".

Because of increase in revenue and therefore no dependence on external sources, the defence and external affairs ministries can operate with confidence at the international level. This will help establish a powerful image of the country on the international platform.

Oil import for example. Present oil crisis can be encountered effectively without putting pressure on individuals economics (e.g. at present, petrol products are burdened by huge tax loads in the current taxation system; an approximate tax burden is about 100 % to 120 %; this includes customs duty, excise duty, state sales tax and local taxes).

Basically it will strike at the very root of the parallel economy, which is based on black money.

The tax collection system being transaction oriented instead of commodity oriented, government can effectively discourage anti-social businesses like Liquor, Gutkha, Alcohol, and Lottery etc.

Corruption free society would be in existence as a result of Transaction Tax system since there would not be an influence of black money based parallel economy. Law and Order System would have a positive effect on their functioning. The system would be more transparent and dynamic leading to a morally boosted social psychology.

Because of uniform taxation throughout the country, price level throughout the market shall be virtually equal. This will lead to an all round development of the nation.

Because total black money presently in existence would be merged with the regular or the legal economic stream, huge money resource will be available which will boost the purchasing power of the nation. Tremendous purchase potential along with probable boosted purchasing power will open many doors for creative ideas. This will result in up gradation of the socioeconomic standards of the nation.

Due to availability of ample resources and corruption free atmosphere, creative brains can find attractive opportunities within the country to build their career. This would check the Brain-Drain problem and subsequently accelerate the development process of the nation.

Since transaction tax system encourages credit (Bank) transactions rather than currency transactions, use of torn currency notes can be effectively checked. Because of sufficient cash supply, the velocity of money circulation will accelerate which will ultimately result in stabilizing of the floating money presently in business of 30, 60, 90 days credit payment terms and everything would be immediate payment. This would result in reduction of the risk factor due to floating money transactions.