Economic Reforms

Abstract

Abstract:- 1) This new economic system contains a new tax system without multiple taxes, tax laws, tax collection departments, tax tribunals and tax enforcement agencies. Citizens need not maintain separate account books and submit tax returns annually for paying either Direct taxes on personal incomes or Indirect taxes while running business or industry. That means there will be no tax collection expenditure for the Government and absolutely no tax compliance cost for citizens in paying either Direct taxes on personal incomes or Indirect taxes while running business or industry. Yet, the tax revenues from single tax called "TOP Tax" will be 20 to 30% more than the tax revenues accruing from present multiple Direct and Indirect taxes in the present tax system. Thus 7 billion people of the world will be relieved from the cobweb of ambiguous and complex tax structures, plethora of tax laws, mandatory and cumbersome accounting, auditing, tax returns and consequent quagmire of all tax related cases.

2) New banking system: Taxation, tax collection, tax enforcement, tax compliance, allocation of revenues to various ministries or departments and money supply into the economy are unified and integrated in the banking system. Budget preparation and presentation will become simple, easy and time saving exercise. All citizens' money, loans, shares, movable and immovable properties, personal and family details will be stored, maintained and used in his/her same account (Main Savings Account) with different folders operated by banks.

3) New monetary system and money supply; This new economic system shall be operated by banks at minimum operating cost. In this new economic system the total money supply (minimum 52.63% real money and maximum 47.37% loan money generated by banks) in the banking system should be at the minimum level of 100% and at the maximum level of 110% of the value of GDP of the country. Out of this total money supply in the economic system, 99.7% of the money will be in dematerialised (non physical) form in the accounts of citizens, Governments and companies. Only small portion of money, equaling just 0.3% of the total money in the economic system, will be in physical form i.e. currency notes or coins. All high valued paper currency notes will be demonetised.

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Keywords: redefining the role of banking sector, simplified taxation system, limited paper currency, dematerialised money

JEL Classification: E51, E52, H21, H24, H25, H26, H61