[Marxistindia] PB on BJP's Swiss Accounts Task Force Report

[news from the cpi(m)]

April 18, 2009


Press Release



The Polit Bureau of the Communist Party of India (Marxist) has issued
the following statement:



          BJP’s Swiss Accounts Task Force Report: A Self Goal


Mr. L.K. Advani released a report of a task force constituted to
recommend measures to bring Indian funds illegally stashed away in Swiss
banks and other tax havens, yesterday in Mumbai. This BJP’s task force
report quotes (page 8) from a study by Washington based Global Financial
Integrity: “The GFI study shows that during the period from 2002 to
2006, annually$27.3 billions were stashed away from India”. If this is
true, then nearly $55 billion worth of illicit transfers occurred in the
two year period, 2002 to 2004, under the BJP-led NDA Government itself,
in which Mr. Advani was the Deputy Prime Minister and the Home Minister.
What did he do to prevent such illegal transfers when he was in power?


The BJP’s task force has arrived at a total figure of Rs. 25 lakh crore
of Indian wealth being held in tax havens on the basis of the following
argument: “So the amount of Indian black wealth secreted away in the
last 60 years – estimated at from $500 billions [Rs 25 lakh crores] to
$1400 billions [Rs 70 lakh crores] – does not seem to be wide off the
mark, if the GFI estimate for the 5-year period 2002-06 is considered.”
Going by the BJP’s estimate, around $ 164 billion or over 30% of the
total stock of illicit money would have been accumulated during the six
years of NDA rule!


The task force report is nothing but a hoax to cover up for the misdeeds
of the erstwhile BJP led Government. The BJP led Government did nothing
to review the tax avoidance treaty (Double Taxation Avoidance Agreement)
with Mauritius during its tenure despite repeated demands by the CPI
(M). The Mauritius route remains to be the largest conduit for the
evasion of capital gains tax and corporate taxes, as far as India is
concerned. Mauritius accounts for 44% of cumulative FDI inflows into
India from April 2000 to November 2008. In contrast, the US and the UK
accounts for only 8% and 7% of India’s FDI inflows. It is clear that
foreign companies are using the Mauritius route to evade Indian taxes.
The BJP’s task force is completely silent on this aspect.


The BJP task force report (page 16) mentions about Participatory Notes
and claims: “Actually the Indian rules permit a Switzerland in India.
How can India call for action against Switzerland when it permits a
mini-Switzerland in India?” However, FII investment through the
non-transparent Participatory Notes was permitted without any
restriction during the NDA rule too, so much so that by the end of its
tenure in 2004, investments under the PN route accounted for nearly 50%
of total FII inflows. What credibility does the BJP has to criticize
these policies today?


The CPI (M) and the Left Parties have been consistent in demanding a
thorough review of the tax avoidance agreements with Mauritius and other
countries, banning of Participatory Notes and restoration of the
long-term capital gains tax which was abolished by the BJP led UPA
Government in 2004 in order to encourage the speculators. It is another
matter that the Congress led UPA Government, given its proclivity to
appease speculative financial interests, did precious little to salvage
the situation. 


The global financial meltdown and economic crisis has brought the issue
of tax evasion by corporates, financial entities and the super-rich into
sharp focus. Governments across the world are taking steps to crack down
on tax havens like British Virgin Islands, Cayman Islands etc. The Swiss
Banks are being asked to disclose information on their account holders
in order to track down assets built through tax evasion. The Indian
Government, however, has so far remained impervious to this growing
global concern. In a press release dated 23rdFebruary (much before this
issue appeared on BJP’s radar) the CPI (M) had demanded: “It is
imperative that the UPA government demand  from Swiss banks and from
banks in tax havens details of accounts of Indians.  In the case of
India, it is not only a case of tax evasion but also of funds being
illegally stashed abroad, or, used for money laundering. If the
government is serious about stopping black money and raising resources
to meet the growing economic crisis, it must take steps to  bring back
the unaccounted, or, ill-gotten wealth of Indians abroad”.

CPI (M) reiterates the following policy steps prescribed in the Election
Manifesto (page 15): 


      * Effective taxation of speculative capital gains by restoring
        Long-Term Capital Gains Tax and increasing Securities
        Transaction Tax 
        


      * Launching a drive to unearth black money, especially those
        stashed in Swiss Banks and other offshore tax havens
        


      * Plugging the Mauritius route; Reviewing Double Taxation
        Avoidance Agreement with Mauritius and other countries
        


      * Prohibiting Participatory Notes used by the Foreign
        Institutional Investors (FIIs) and discouraging speculative
        finance
        


      * Reversing moves towards Full Capital Account Convertibility