p. 1

all economic ills ­ one pill top tax system future tax system top tax system is a new tax system which can be used as a common tax system for all nations to make the whole world into one fully open market salient features of this new tax 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 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 there will be no tax collection departments tax enforcement agencies and tax tribunals yet the tax revenues collected by banks from single tax called top tax will be 30 to 40 more when compared to total tax revenues accrued from all taxes in the present tax system 100 tax collections without tax collection departments no tax collection expenditure for the governments no tax compliance cost for the people no direct and indirect taxes and no tax returns no check posts way bills accounting auditing tax laws tax raids etc tax component on any commodity or service will be less than 11 unlike more than 30 in the present tax system the prices will be substantially decreased no tax evasion and its main product black money simplified budget preparation presentation and implementation by varma please visit http www.optimaltaxation.net page 1

[close]

p. 2

all economic ills ­ one pill top tax system i am suggesting new methods models and innovative and alternative policies in the areas of monetary system budget preparation banking finance system public finance optimal taxation tax collection tax compliance subsidies money supply and fiscal policy to help remove corruption tax evasion economic recession black money fake currency ransoms robberies and societal inequalities in my opinion the proposed new economic system may usher in good governance 100 tax compliance and corruption free environment it suggests a single tax called top tax transfer or purchase tax for both centre and states combined in place of present multiple indirect taxes with different slab rates on different goods/commodities/services and multiple direct taxes with different slab rates relieving 6.9 billion people of the world 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 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 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 this new economic system involving a new tax system without multiple taxes tax laws tax collection departments tax tribunals and tax enforcement agencies envisages 20 to 30 more revenues than presently accruing from multiple taxes collected by different tax collection departments/agencies the availability of resources and capital flows needed for economic recovery is the self-priming character of the top tax system without government s fiscal stimulus packages this new economic system shall be operated by banks at minimum operating cost with limited paper currency 0.4 and dematerialised money 99.6 of the total money available in the economy in the particular country thereby totally eliminating black money tax evasion fake currency corruption and extortions under this new taxation system the tax net cast by banks will be the broadest with absolutely no tax evasion making it possible for the lowest tax slab rate and the cheapest prices of commodities/services the redistribution of revenues from government to people in the form of welfare schemes subsidies and various relief funds will become easier without leakages bribes and misappropriation although this new taxation system is a basic model suggested mainly for india the basic concept of taxation tax collection and tax compliance methods can be adopted and implemented by all the developed and developing countries alike to benefit 6.9 billion people of the world in all spheres of their lives in one form or the other this article contains seven parts 1 tax structure and direct benefits of the top tax system 2 method of implementation of top tax system 3 money supply and monetary policy 4 operating cost of the top tax system 5 comparative study of tax revenues between present system and the proposed top tax system 6 advantages of top tax system 7 summary of top tax system please visit http www.optimaltaxation.net page 2

[close]

p. 3

all economic ills ­ one pill top tax system 1 tax structure and direct benefits of the suggested top tax system tax structure of suggested top tax system present system direct/indirect taxescentre and states 1.income tax 2.corporation tax 3.capital gains tax 4.wealth tax 5.securities transaction tax 6.central excise duty 7.customs duty 8.service tax 9.sales tax/vat by states 10.stamp duty 11.land revenue 12.professional tax 13.state excise 14.octroi 15.surcharges and other cess 16 property tax 17 gift tax 18 cst suggested top tax system suggested slab rate 1 5+6+8+9+10+12+14+15+17+18 transfer or purchase tax top tax for states and centre combined slab rate 4 1+3+4 profit tax totally avoidable for states and centre combined slab rate=30 4 2 30 3 corporation optional tax by centre 20 4 customs duty by centre optional nil 5 excess land tax states and centre combined optional state excise by states 6 there will be only one mandatory tax called top tax with single slab rate4 for both centre and states combined in the proposed top tax system the profit tax in place of present income tax and capital gains tax will be account basic and totally avoidable unlike individual basic and compulsory in the present system for clear understanding please see table number 1 and 2 in page number 6 and 7 profit tax means it will be imposed on person s incomes if remained any earned/got through salary remuneration business industry donations and gifts after liberally used on expenditure/spending various investments gifts and donations in the present system personal income tax is levied on incomes earned/got through salary remuneration business gifts donations and sale proceeds however with some exemptions before used on expenditure/spending donations and various investments under proposed top tax system the corporation tax and custom duty/import duty can be levied by the central please visit http www.optimaltaxation.net page 3

[close]

p. 4

all economic ills ­ one pill top tax system government as usual to save small scale and domestic industries respectively similarly the excise duty on liquor and wines can be levied by the state governments as under the present system to inhibit heavy consumption and addiction direct benefits of the suggested top tax system under proposed top tax system there will be no income tax and other direct taxes benefits so under suggested top tax system people who have taxable incomes got from salary remuneration/professional income/donation/gift/service/business/industry will benefit as they need not pay income tax/other direct taxes and submit income tax returns annually 7 billion people of the world will be unshackled from all direct taxes tax laws tax raids tax returns accounting and auditing under suggested top tax system there will be no sales tax vat central excise duty cenvat service tax and all other indirect taxes benefits:1 markets will be fully open without any hurdles like multiple taxes permits licenses way bills accounting auditing tax returns and tax laws traders manufacturers transporters dealers retailers vendors contractors service providers and all others will not need to maintain account books sales lists stock lists way bills etc no accounting auditing and tax returns will be required for individuals who run business or industry the present day trade barriers between manufacturers and consumers between the states within the country and between the nations can be totally removed 2 therefore all the check posts within a top tax system implemented country can be totally removed allowing free movement of industrial goods/commodities and agriculture produce from anywhere to anywhere in that country and benefitting all farmers manufacturers traders and more importantly the consumers 3 the entire truck owners will benefit as they need not pay bribes at check posts they need not carry way bills while transporting industrial goods and agriculture produce from one place to another place in that top tax system implemented country 4 the entire farming community will benefit as they can transport their agriculture produce from anywhere to anywhere and sell their produce at market prices 5 there will be no tax collection expenditure for the governments and no tax compliance costs for the people yet the tax revenues from single tax top tax will be 20 to 40 more than total revenues presently accruing from all direct and indirect taxes collected by multiple tax collection departments at huge expenditure for both states and centre combined 6 the tax component on any commodity product or service will be less than 11 while the average tax component is more than 35 in the present tax system 7 there will be absolutely no scope for tax evasion and it s by products namely black money and corruption please visit http www.optimaltaxation.net page 4

[close]

p. 5

all economic ills ­ one pill top tax system 2 method of implementation of top tax system basic model india what is required for top tax system to be successfully implemented is the strong political will to build the basic infrastructure of providing banking service for every village/suburb/town or colony having a population of around 2000 with the help of private sector banks and institutions the central government should give a permanent account number pan by using biometric method and iris identification to every citizen above the age of 15 years and make mandatory for every citizen to have only one main savings account msa with the same pan in the bank/service centre situated at the village or colony where he lives in the pan and msa number should be one and same every citizen would be allowed to open any number of sub savings accounts ssa as he/she wishes to operate business or industry in as many banks by using msa number under proposed top tax system the accounting and auditing of the corporate or public companies will be mandatory and compulsory as in the present system for protecting the interests of the investors corporate or public companies will be given corporate account numbers can the main savings account msa should be used for buying of shares land for agriculture or industrial purpose plots flats gold jewellery vehicles commercial establishments or any other movable or immovable property the msa shall also be used to receive or pay salaries professional fees service fees remunerations donations loans etc main savings account is also needed to get driving licence passport voting right subsidies funds monthly ration pensions remittances and loans personal agriculture business educational and industrial and for getting compensation/exgratia/relief funds in the event of natural calamities like cyclones earthquakes floods famines accidents etc the sub savings accounts ssa and also the main savings accounts msa can be used for running business industry schools colleges hospitals hotels restaurants construction studios services or any other type of business just like msa the ssa can also be used to receive or pay salaries professional fees service fees remunerations donations loans etc the corporate or public companies will have to operate all cash transactions through the corporate account number can only after establishing sufficient number of banks/service centres by the government for example india with the help of private sector banks and financial institutions all the citizens should be asked to deposit all the currency notes of 1000 500 100 and 50 rupees except 20 10 5 2 rupee notes/coins available with them in these banks in their newly given main savings account msa or sub savings accounts ssa within a stipulated time of 30 days all presently run savings accounts and current accounts should be converted in to sub savings accounts ssas with the same account numbers and can be operated from the same banks similarly people who have money in the fixed deposits/fdrs will have to transfer all their money from these fixed deposits/fdrs to their respective newly given msas or newly opened/converted ssas within the same stipulated period of 30 days after this grace period of 30 days the government for example india needs to demonetise all notes of denomination 1000 500 100 and 50 rupee notes except 20 10 5 and 2 rupee notes from then on the top tax system becomes operational every person shall be allowed to withdraw cash up to maximum of rupees 5,000 per month from his/her earnings or savings available in his/her main savings account only thus a family of two can avail cash of 10,000 please visit http www.optimaltaxation.net page 5

[close]

p. 6

all economic ills ­ one pill top tax system rupees maximum per month mainly to buy daily necessities like vegetables milk fruits edibles groceries and all other small or low valued items a person s maximum cash withdrawal of 5,000 per month from his/her main savings account msa through bank or atm will be in rs 20 rs 10 and rs 5 notes only a person can get some portion of his/her incomes/earnings transferred directly in to msas of his/her other non earning family members from source of his/her incomes/earnings so that his/her family can withdraw more cash currency per month every individual s incomes and savings will be in dematerialised form in his/her msa or ssas other than cash withdrawals of maximum rs 5,000 per month from his/her main savings account msa no person will be allowed to withdraw cash from his/her sub savings accounts ssa every time a person buys high valued items goods vehicles land plot flat gold jewellery vehicles or any other movable or immovable property avails physical or intellectual services or in case he/she lends donates money to others then he/she needs to transfer the required money from his/her sub savings account/main savings account through cheque debit card or net banking online cash transfers businessmen traders industrialists will have to make their cash transfers for all transactions through cheque debit card or net banking online cash transfer from their sub savings accounts/main savings account similarly a person s salary or remuneration or professional fee and all his/her incomes from business or industry will be credited to their sub savings accounts or main savings account through cheques debit card or net banking online cash transfers all three accounts namely can ssa and msa can be utilised to receive pay or store incomes/earnings/savings/donations/loans but cash can be withdrawn only from msa if available up to maximum rs 5000 per month per person the remaining available money dematerialised form from msa can be used or spent through debit card cheque or online cash transfer for every transfer of amount a 4 transfer or purchase tax top tax of that amount will be automatically deducted from his/her msa/ssa account this 4 tax amount on every cash transaction through msa/ssa/can from all banks in a particular state will go to the combined account of state and centre in that particular state 30 of this amount from every state and centre combined account sacca will go to central government pool account the remaining 70 will be retained by the respective state governments this 4 transfer or purchase top tax can be reduced to 2 within 4 years from the adoption of this top tax system by reducing 0.50 basis points per year this will further reduce the prices of the commodities benefitting consumers all government accounts and banks will have to be exempted from this top tax vivid explanation this 4 transfer or purchase tax top tax on each cash transfer irrespective of the reason for such transfer purchase gift donation salary/remuneration or any other purpose operated through main savings accounts msa sub savings accounts ssa corporate account numbers can and operated by any bank or service centre will be automatically deducted from that account and transferred to state and centre s combined account sacca the top tax will be the same and uniform throughout the country on all cash transfers made through online/cheque/dd from all accounts towards purchase gift donation and salary/fee/remuneration so in the suggested top tax system the tax base will be the largest to have the minimum slab rate and the lowest tax component on each commodity/service people will get commodities/services at the lowest prices than in the present system furthermore the total revenues generated from top tax from all cash transfers from all accounts will be more than double than the combined revenues of all states and centre got from present multiple taxes with different slab rates with limited paper currency and dematerialised money in the top tax system every transaction will be please visit http www.optimaltaxation.net page 6

[close]

p. 7

all economic ills ­ one pill top tax system transparent depicting the actual gdp of the country in literal sense every purchase gift donation and all types of payments will have to be carried through online cash transfers from one account to another account because of limited paper currency the total revenues got from top tax will be approximately equal to 3x4 12 of actual value of the gdp of that country in the manufacturer dealer retailer and consumer chain as goods commodities services donations physical and intellectual woks change hands in the manufacturer dealer retailer and consumer chain dematerialised money will be transferred from one account to another account correspondingly thus every cash transfer towards purchase gift donation salary/remuneration or any other purpose will be accounted and within the system eliminating underground/shadow/unreported/hidden transactions operated by physical currency got from black money and fake currency in the present economic system in the present system the parallel economy being run by black money and fake currency is obscuring the real gdp and hampering or lowering the collection of revenues the top tax system will eliminate the black money and fake currencies at one go and depict the exact gdp of the country the other salient feature of the top tax system is the better economic management and austerity the individuals who run business or industry will be relieved from ambiguous tax structures plethora of tax laws and mandatory sales lists stock lists accounting auditing and tax returns in addition to the transfer or purchase top tax a profit tax pt of 30 would be levied and automatically deducted once a year on the minimum amount recorded in the financial year of main savings account msa and each sub savings account ssa if any of every citizen the financial year of the msa of a person begins at the date the government allots him/her the msa the financial year of the sub savings account ssa will begin at the date a person chooses to open his/her ssa this profit tax pt is an account basic and it is totally irrelevant who owns that account msa/ssa the profit tax 30 of minimum balance amount recorded in the msa and each ssa if any of every person will be automatically deducted on the last day of the financial year of that msa and ssa if any of each person the profit tax in the next financial year of that particular msa/ssa will be levied on the minimum balance recorded of that year minus the previous year s taxed amount of that particular msa/ssa ignoring the maximum amount however huge may be thus the deducted profit tax 30 of minimum balance amount recorded in the msa and each ssa if any of every person in a particular state will be transferred to that state and centre s combined account sacca the combined taxes of top tax and profit tax collected in every state and centre s combined account sacca will have to be shared between that particular state and centre in the ratio of that particular state getting 70 and centre 30 hence the totally optional and avoidable profit tax will ensure that the money will be constantly pumped back into system keeping the economic growth at healthy rate in the present system the huge black money generated by hidden/shadow accounts combined with huge fake currency is playing havoc with our economy besides these two taxes namely top tax and profit tax which can be avoidable the central government shall impose the customs duty import duty and corporation tax as in the existing system except these four taxes the top tax system suggests removal of all other direct taxes indirect taxes and various surcharges levied in the present system the following two tables clearly illustrate how totally avoidable profit tax is deducted from ssa and msa of a person on minimum balance amounts recorded in each financial year excluding the previous or last taxed amount please visit http www.optimaltaxation.net page 7

[close]

p. 8

all economic ills ­ one pill top tax system example1 it shows how the profit tax on minimum balance amounts recorded each year excluding the previous or last taxed amount will be deducted from each sub savings account ssa operated by a bank/service centre irrespective of the fact that who holds that account minimum maximum profit tax pt on the min net profit tax year balance of balance of amt ­ the last taxed amount ptdeducted the year the year 2007 08 10,000 50,00,000 30 of 10,000 3,000.00 2008 09 40,000 70,00,000 30 of 40,000-10,000 9,000.00 2009 10 90,000 1,80,00,000 30 of 90,000-40,000 15,000.00 2010 11 20,000 2,00,00,000 2011 12 1,50,000 5,00,000 30 of 1,50,000-90,000 18,000.00 2012 13 1,50,000 10,00,000 2013 14 2,00,000 80,00,000 30 of 2,00,000-1,50,000 15,000.00 2014 15 1,00,00,000 2,00,00,000 30 of 1,00,00,000-2,00,000 29,40,000.00 2015 16 80,00,000 3,00,00,000 example 2 it shows how the profit tax on minimum balance amounts recorded in each financial year excluding the previous or last taxed amount will be deducted from each main savings account msa operated by a bank/service centre irrespective of the fact that who holds that account minimum maximum profit tax pt on the min net profit tax balance of balance of the amt ­ the last taxed amount ptdeducted year the year year 2007 08 2,99,000 50,00,000 2008 09 3,00,000 70,00,000 30 of 3,00,000 90,000.00 2009 10 4,00,000 4,50,000 30 of 4,00,000-3,00,000 30,000.00 2010 11 2,00,000 8,00,000 2011 12 4,50,000 5,00,000 30 of 4,50,000-4,00,000 15,000.00 2012 13 4,50,000 10,00,000 2013 14 6,00,000 80,00,000 30 of 6,00,000-4,50,000 45,000.00 now it is clearly understood that the transfer or purchase top tax will be same on cash transfers in all three accounts namely main savings account msa sub savings account ssa and corporation account number can the profit tax is also same in main savings account and sub savings account except the minimum storage balance in main savings account msa the profit tax on minimum balance in main savings account will be levied from rs 3 lakhs onwards the profit tax on minimum balance in sub savings account starts from zero onwards in the case of corporation account number can the profit tax will have to be levied in the form of corporation tax as in the existing system please note that each person will have only one permanent and life time main savings account msa but can have as many sub savings account ssa as he/she can wish similarly the profit tax will be on account basic and totally avoidable instead of individual basic and compulsory as in the present economic system please also note that the profit tax on minimum balance recorded in each year in main savings account will be levied from rs 3 00,000 onwards in the present system the income tax accounting auditing and tax returns are compulsory so persons who have taxable incomes through salary or business or industry or please visit http www.optimaltaxation.net page 8

[close]

p. 9

all economic ills ­ one pill top tax system remuneration need to submit income tax returns annually but top tax system s profit tax means it will be imposed on person s incomes got through salary remuneration business industry donations and gifts after liberally used or spent on expenditure/spending various investments gifts and donations profit tax of 30 on minimum balance recorded in the financial year of each sub savings account ssa or main savings account irrespective of the holder of that account operated by any bank/service centre will be deducted on the last day of the financial year of that particular ssa or msa and will be transferred to state and centre s combined account sacca the profit tax in the next financial year of that particular msa/ssa will be levied on the minimum balance recorded of that year minus the previous year s taxed amount of that particular msa/ssa ignoring the maximum amount however huge may be please understand that minimum balance recorded in the financial year of each sub savings account ssa or main savings account means the money unused or stagnated for more than one year in the next financial year of the msa or ssa the profit tax will be levied on the additional unused or stagnated money over the previous taxed amount that means there will be no recurring profit tax on unused or stored money once taxed the unused money can be spent and recharged/restored without being re taxed for the entire life of that account in the case of capital gains from a sale of any property or asset a person will have a minimum of 364 days and maximum of 1 year and 364 day s period to avoid profit tax from sale proceeds capital gains to reinvest similarly 4 transfer or purchase tax top tax in lieu of present all indirect taxes and various surcharges will be deducted from every money transfer in each sub savings account or main savings account irrespective of the fact that whoever holds that account and on what purpose the amount has been transferred purchase gift donation salary/remuneration or any other purpose operated by any bank or service centre and transferred to state and centre s combined account sacca thus all individuals who earn through salaries remunerations gifts and donations will need not pay income tax and submit income tax returns annually thus people will be relieved from the cobweb of present ambiguous and complex tax structures plethora of tax laws mandatory and cumbersome accounting auditing and tax returns and consequent quagmire of all tax related cases how to avoid profit tax every person will have the following options to avoid profit tax of 30 being deducted from his/her main savings account and sub savings accounts he/she can buy lands up to 20 acres of land unlimited number of flats commercial establishments and other properties as he/she wishes this enables real estate sector grows at faster rate and house rents will come down substantially benefitting families who have no own houses he/she can buy unlimited number of shares as he/she wishes .even though he/she looses a 4 of share value as top tax while transferring cash from his/her account still he/she gets benefited from 30 profit tax being deducted so people will look out for the companies which declare dividends every year they also study carefully the fundamentals of the company like the book value eps p/e ratio profits dividends reserves liabilities etc before buying shares in this scenario the stock markets will grow at steady rate and there will be no market crashes now and then as we are experiencing under present system he/she can lend money to others who are in need even though he/she looses 4 of money as top tax while transferring cash he/she gets benefited by getting 4 interest on the loan please visit http www.optimaltaxation.net page 9

[close]

p. 10

all economic ills ­ one pill top tax system amount ever year in the process the loaners loan takers will get loans at cheaper rate when compared to present system he/she can setup industries start businesses to avoid profit tax so in this process huge employment opportunities will be generated so in the ensuing competition commodities prices will become much cheaper he/she can transfer cash from his/her msa/ssas to another one of his/her sub savings accounts or to his wife s/her husband s ssas to avoid profit tax he/she can donate huge amounts to organisations/charitable trusts if he/she wishes in this process he/she will lose 4 of that transferred cash in the form of top tax he/she can invest in various life insurance schemes at the end of the maturity period they will get only the actual total premium amount paid without any interest but in case of premature death or hospitalisation due to illness full insured amount will be paid as in the present system vivid explanation the top tax system s tax collections top tax and profit tax for government and tax payments/tax compliance by all citizens will be totally automatic and involuntary just like respiratory system in human body every account msa/ssa/can is an involuntary taxpaying account 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 the single tax net transfer or purchase tax spreads all accounts and entire nation without bothering about who holds that account this will put the tax component of goods/services at just one third of tax component of the existing system besides that there will be no tax collection expenditure for the government and absolutely no tax compliance cost for paying either direct taxes on personal incomes or indirect taxes while running business or industry the transfer or purchase tax 4 will be deducted automatically by computer systems of banks on all money transfers from one account to another account made through cheque debit card dd or online transfers irrespective of the fact that who holds that account and for what purpose that money transfers have been made thus tax collection and tax compliance will invariably become one and same this automatic tax payment and tax collection system ensures that there will be no revenue leakages unaccounted incomes and wealth there will be no need for governments to run separate tax collection departments and tax enforcement agencies and departments to see and verify accounts of all taxable citizens similarly people need not employ accountants or tax consultants to pay either direct taxes or indirect taxes or to submit tax returns the plethora of tax laws that are enacted and being used in the present system to enforce tax payments will not be necessary at all in the top tax system the millions of tax related legal cases which are emanated from non compliance of taxes and unaccounted incomes and choking the judicial systems of all nations will not be seen in the top tax system this is how the top tax system works and helps both government in direct and indirect tax collections without tax laws and enforcement and citizens in paying taxes involuntarily without tax compliance accounting auditing tax returns etc costs the collected tax revenues of top tax and profit tax by banks will go to government accounts sacca these revenues will be transferred to various departments/ministries according to the percentages as allocated to these departments/ministries at the budget presentation this percentage of allocations to various departments/ministries can be changed from time to time depending upon the necessity need urgency and emergency of the situation that arise unexpectedly as stated earlier the revenue generation will be smooth easy and continuous process at minimum burden on people making it possible for please visit http www.optimaltaxation.net page 10

[close]

p. 11

all economic ills ­ one pill top tax system the simplified budget presentation the collection of revenues from people to government and transfer of these revenues from government to people through various ministries/departments/agencies is smooth hassle free and continuous process without leakages tax collection tax enforcement and tax compliance costs in the present economic system direct and indirect taxes are being paid by citizens based on the accounts prepared by them and there is common financial year for all citizens to submit their accounts and income tax returns but in the top tax system top tax and profit tax will be on account basic the financial year of each account ssa/can begins at the date it is opened and the financial year of msa will begin at the date the government allots msa to each citizen at the age of 15 it doesn t matter much what the financial year of each account is the number of accounts that begin or end each day is approximately equal to the total number of accounts operated by all banks in that country divided by 365 the common financial year for the whole nation will become irrelevant unimportant and redundant in the top tax system each individual can have a chosen financial year for his every ssa account in the present economic system most of the money in circulation is in physical form bills/notes there are reported to be plenty of cases of lootings robberies homicides extortions ransoms and bribes across the world in almost all nations because of this huge money in physical form this physical money in huge amounts is being transferred from one hand to other eluding all tax nets in transactions of commodities or goods the unaccounted gdp is said to be too heavy and varies from country to country depending upon the corruption level that exists in that country in addition to this black money there are also huge amounts of fake currency that has contaminated the genuine currency the combined effect of the black money and fake currency is playing havoc with economies of many countries now money is being treated as an income generating asset and wealth instead of using it as a medium in exchange of commodities goods services and shares physical and intellectual works the huge accumulation of money in few pockets in the form of black money is making the cyclic circulation of money in the economic system to be erratic some times more cycles per year and some times less cycles per year with stagnation/non usage of money causing economic recession at times the multiplier effect on the money in banking finance system is decreasing the real face value of the physical currency although the individual s earnings are increasing every year the purchase value of the currency is decreasing and reached almost 1/10th of its face value top tax system tries to fix this problem by qualitative and quantitative supply of money in economic system so that the purchase value of physical currency at its face value remains high and same for longer period of time the prices of commodities or services will remain same or even decrease enhancing the purchasing capacity of people every year with increase in earnings per capita income each year please see page money money supply loans real money and credit money from page 18 to page 20 in the suggested top tax system most of the money 99.6 available in the economic system will be in dematerialised form in the accounts of citizens governments and companies only small portion of money 0.4 will be in physical form cash i.e coins or notes at low denomination for example india the parallel economy being run by black money almost equalling the accounted gdp of the country and an estimated rs 1 60 000crore fake currency will be totally eradicated with the demonetisation of higher value please visit http www.optimaltaxation.net page 11

[close]

p. 12

all economic ills ­ one pill top tax system currency notes rs 1000 500 100 50 notes in the suggested top tax system paving way for corruption free society so there will be no generation of black money and fake currency and accumulation and stacking of money in physical form cash will not be possible money will be constantly pumped back into the system so as to avoid profit tax the circulation of money in the economic system will be at constant rate with more cycles while checking inflation even at higher growth rate the more cycles or exchange of money more times means money is spread evenly reaching all people top tax system would also arrest illegal activities such as drug trafficking and arms trafficking once launched into this top tax system prices would continue to decline to reach a minimum level of ¾th and further up to half level of the present prices due to the following factors namely low tax component below 11 low interest rates 3 per annum no tax compliance costs and fully open market with more players in the business money will be purely utilised only for exchange of goods commodities assets services shares physical and intellectual works when the top tax system reaches its final destination the prices of commodities/goods or services include only the value/cost of manpower physical/intellectual where abundant raw materials are available in the present system the prices of commodities/goods or services include various components like raw materials cost tax profit interest corruption tax compliance cost man power physical/intellectual transport power fuel/electricity and shelf life the final result of top tax system will be the achievement of perfect equilibrium between demand and supply development and equality growth and inflation real money and credit money loaned money revenues and expenditure the lopsided development among people and regions that is being witnessed in the present economic system will cease to exist the natural resource and wealth of a country can be equally distributed among the people under present economic system there are only a few players more referees license permit check posts way bills auditing assessment and inspection and more spectators the proposed top tax system will leave space for more players a few referees pollution control board only and a few spectators the markets will become so wide open with no permits or licences required except pollution control board s permission to run any business or industry except those where absolute necessity is required for permissions from governments for mining ores minerals seeds pesticides explosives etc thus everyone can enter into the market and start his/her own business or industry without any shackles thereby reducing unemployment substantially at the same time with so many players in the market and high competition the prices of goods/services will become cheaper benefitting consumers this invariably increases consumption leading to more production and growth rate the basic concept of the top tax system is that only single tax in the place of present multiple taxes will be paid by the people on commodities/services manufactured within the country apart from the customs duty which is imposed only to save domestic industry or business the customs duty can be removed on certain goods like cement and steel as and when necessary to check the jacked up prices caused by cartel among these companies and also on agriculture produce when sufficient food grain production is not available for consumption or procurement towards essential buffer stock because of drought or other natural calamities so the annual budget presentation if necessary will be mainly utilised to distribute and allocate revenues to various sectors departments and welfare schemes instead of focussing on taxation tax collection and enforcement on tax compliance please visit http www.optimaltaxation.net page 12

[close]

p. 13

all economic ills ­ one pill top tax system in the present economic system the budget preparation is massive multi staged time consuming and laborious process there are thousands of different high or very low valued goods or services to be segregated into different groups and taxed by both centre and states with different taxes at three or more slab rates and as if these are not enough there are additional surcharges or cesses on selected goods these tax structures and slab rates on different goods keep changing every year with these complicated tax structures and ever changing slab rates every year the tax compliance by individual manufacturers dealers and retailers has been difficult cumbersome and bothersome taxes are being collected by different tax collection departments based on the accounts maintained by individuals who run industry or business there is plenty of room for understatement of production and sales tax evasion and consequent by-product of black money but in the suggested top tax system there will be single tax called top transfer or purchase tax with fixed/stationary slab rate 4 on all money transfers from one account to another account through cheque debit card and online transfer/net banking in the purchase chain of consumers retailers and manufacturers the transfer or purchase top tax 4 will be deducted automatically by computer systems of banks on all money transfers from one account to another account irrespective of the fact that for what purpose purchase/donation/salaries/loans and by whom these money transfers have been made the tax will be only on money transfers form one account to another rather than on the value of good/commodities and services with ever changing slab rates every year at budget time in the present taxation system so the revenue collections for both centre and stated governments will be instant automatic prompt and continuous process throughout the year with no room for tax evasion there will be absolutely no tax collection expenditure for the government and tax compliance cost for citizens the purpose of budget preparation will be only the allocation of revenues got from top tax and profit tax to various sectors departments or ministries taxation tax collection tax enforcement tax compliance allocation of revenues to various ministries or departments and money supply into the economy are unified in this unique top tax system so the budget presentation will become simple smooth and time saving or even there will be no need for budget presentation each year the yearly budget presentation can be solely utilised for percentage wise allocation and channelling of those automatically collected top tax and profit tax revenues by banks to various sectors like housing health care education drinking water transport irrigation agriculture environment sanitation infrastructure projects rural development defence and internal policing the percentage of funds allocated to various ministries departments or sectors can be changed every year depending upon the need necessity and urgency acquired by them the government structure and machinery can be restructured downsized and fine tuned not only to reduce wasteful expenditure but also to cater to the basic needs of people concerning housing health care education sanitation and drinking water to say briefly the government s entire concentration and top most priority will shift from taxation tax collection and enforcement to implementation of welfare schemes and development of infrastructure projects in this new economic system the total revenues of any country will be approximately equal to 4 top tax x 3 12 of the total gdp value of that country while assuming that each commodity or service will change hands at an average of three times in the consumer retailer dealer and manufacturer chain that means at each change of hands of any commodity or service the money will be transferred from one account to another account please visit http www.optimaltaxation.net page 13

[close]

p. 14

all economic ills ­ one pill top tax system while leaving no room for tax evasion there will be additional 5 to 10 top tax revenues on the resale of the shares movable and immovable properties and donations in that country furthermore there will be revenues from avoidable profit tax in all probability these revenues will be more than 150 of the revenues that are accruing from multiple taxes in the present economic system please remember that all these revenues will be collected without any tax collection expenditure on tax collection departments tax tribunals and tax enforcement agencies in the suggested top tax system the banks/service centres will become virtually the intermediaries between people and the government for all tax collections and redistribution of funds/revenues from the government to people who should be the natural eligible and legitimate recipients while eliminating whales parasites and limpets whenever a person migrates or moves to a new place his old address in main saving account msa should be changed with the new address to get monthly ration subsidies compensation/ex gratia/relief funds in the event of natural calamities like earthquake cyclones floods famine drought etc in that particular place and also to get voting right in that particular constituency in the suggested top tax system the main savings account msa of each person shall be utilised as the de-mat account of that person for holding both movable and immovable properties like shares lands plots flats gold silver jewellery ornaments very high valued articles motor cycles cars other vehicles and all other properties/assets while purchasing or selling the transfer of ownership rights of these assets/properties from one person to another person shall be made from one person s msa to another person s msa through banks/service centres in a digital/electronic form usage of msas ssas and cans:in the present economic system a person s or a company s money movable or immovable propertieslike vehicles plots flats houses factories commercial establishments lands etc shares family tree insurance policies and all other assets are recorded managed and handled by different departments agencies or institutions but in the suggested top tax system money movable or immovable properties like vehicles plots flats houses commercial establishments lands etc shares family tree insurance policies and all other assets are recorded managed and handled in a single account called main savings account msa with five folders in case of individuals and in corporate account numbers can with seven folders in case of companies which issued shares for public these accounts msa s ssa s and can s will be maintained and operated by banks replacing different departments tax collection and tax enforcement boards agencies or institutions of the present economic system thus people s money shares all movable and immovable properties will be in only one account msa with different folders operated by banks so money shares and all other movable and immovable properties can be stored maintained and used from this single account called main savings account msa with five folders in case of individuals and corporate account numbers can with seven folders in case of companies which issued shares for public transfer of money shares movable and immovable properties goods services physical and intellectual works are simultaneously transferred from one account to another account while purchasing or buying 1 usage of main savings account msa there will be only one compulsory and mandatory msa for each person given by the government this msa will have five folders for each specific purpose of an individual please visit http www.optimaltaxation.net page 14

[close]

p. 15

all economic ills ­ one pill top tax system the first folder liquid money folder will be used for storage and usage of money in top tax system it is called as liquid money generated through savings/earnings/incomes/donations this folder of msa can also be used to run or operate any business or industry owned wholly by an individual the second folder immovable property folder shall be used for registration storage and usage of ownership rights of all immovable properties like lands flats plots commercial establishments and etcetera the ownership rights of these assets will be transferred from one person s msa to another person s msa while purchasing/selling/donating of these immovable properties the third folder movable property folder shall be utilised for ownership rights of all movable properties like vehicles gold jewellery and etcetera the ownership rights of these properties will be transferred from one person s msa to another person s msa while purchase/sale/donation of these movable properties in the top tax system the movable and immovable properties are called as solid money these properties solid money will have both ownership rights and in physical enjoyment vivid explanation in this suggested top tax system the immovable property folder and the movable property folders of main savings account msa of each person shall be utilised as the de-mat account of that person for ownership rights of both movable and immovable properties like shares lands plots flats gold silver jewellery ornaments very high valued articles motor cycles cars other vehicles and all other properties/assets while purchasing or selling the transfer of ownership of these assets/properties from one person to another person shall be made from one person s msa to another person s msa through banks/service centres in an electronic/digital form so the transfer of assets like lands plots flats gold jewellery ornaments and vehicles will take place in physical form upon the transfer of ownership right of that asset in digital form from one msa seller to another msa buyer larceny burglaries lootings and extortions will come to an end because without the ownership rights of gold silver jewellery and other high valued items in the msas they cannot be sold or bought in literal sense banks will virtually act as custodians for people s money shares assets and all movable and immovable properties the bank branches banking service centres will be intermediaries between people and depositary who should be under full control governed monitored and checked by central bank of that particular country in other words bank branches/banking service centres can be called as single window shops where all basic services of the people will be met top tax system suggests that total land record of the country should be dematerialised according to extent location mapping and ownership the land belongs to people will be recorded in their respective msas similarly the land that belongs to government government organisations companies should be recorded in their respective accounts in the top tax system the bank branches/banking service centres will act as middle men for people manufacturers dealers sellers and buyers for transfer or trade of money shares commodities lands flats plots vehicles and other movable or immovable property while buying or selling at absolutely free of cost under the top tax system lands plots flats or other properties purchased should be made through main savings account only if any person buys land plot flat or any other property anywhere in india the extent and nature of the property will be credited in his main savings account and the same property will be debited from the seller s main savings account msa whenever he/she sells any property that is credited in his msa the same will be debited from his/her main savings account and the same property will be credited in the please visit http www.optimaltaxation.net page 15

[close]