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all economic ills ­ one pill top tax system money supply in top tax system by varma excerpt top tax system suggests that total money supply liquid money real money and debt money/loan money to be necessary for circulation in banks should be at the minimum level of 100 and at maximum level 110 of the value of gdp of the country a brief description of money supply in present economic system and the top tax system money supply in present economic system money is classified as different categories like m m1 and m2 and so on the money in the banking system can be expanded up to 9 times the initial reserve due to money multiplier factor the velocity of cyclic rotation of money in the economic system is erratic and not stable because of the extra added weight the loaned money carries in the form of interest burden here money is having both exchange value and storage value the money s volume is increasing by virtue of its stationary position in the form of demand deposits savings deposits bonds etc the carcinogenic growth of loaned money causes inflation here the high growth rate and inflation are inseparable siamese twins there is sizable physical money which helps tax evasion in generating black money for example in india there is an estimated physical currency of 10,72,020 crores with the public out of total money supply of 77,25,560 excluding fake currency in the economic system as at 2012 june 29 this physical currency is about 13.8 of the total money supply in the economic system the unaccounted gdp carried through unreported/hidden/shadow accounts with active support from physical currency is assumed to be almost equal to the officially recorded gdp the unaccounted cycles of 10 physical currency are almost equal to the cycles of the remaining 90 of the total money supply in the economic system the non physical money which has to honour the taxes tax laws accounting auditing and tax returns is having less velocity the physical money with its natural free flowing tendency is choosing the smooth domain where it can escape from taxes tax laws accounting auditing and tax returns to get greater velocity in its cycles that means the total money in the economic system has two extremely different velocities one for the physical money and the other for the non physical money the exact volume of real money and loaned money cannot be known at any specific time instantly the real money and loaned money are mingled together beyond recognition so the exact values of the total money supply the velocity and cycles of the money and gdp may not be available the money supply and gdp values that are being furnished are believed to be off the mark the exact results of measures taken by the governments and central banks from time to time to please visit http www.optimaltaxation.net page 1

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all economic ills ­ one pill top tax system check inflation or to infuse fiscal stimulus packages to control recession can be observed only after long time the medicines and therapy that are used to nurse the health of an economy are basically trial and error methods money supply in top tax system the functioning of banking system in top tax system is totally different from present bank system there will be only two types of money namely real money and loaned money in the top tax system the real money and loan money will be total money supply in the banking system the value of the real money will be equal to 52.63 minimum level of total money supply in the economic system if reserve ratio is 10 the remaining 42.37 of the money supply can be generated through loans the real money would be at minimum level of 52.37 and can increase beyond that the total loaned money given by banks would be at the maximum level of 42.37 or 90 of total money supply and can decrease below that an increase in the real money beyond 52.63 means a decrease in the loaned money from 42.37 the physical currency constitutes just .03 of the total money in the economic system the remaining 99.7 of total money supply will be in non-physical form in the banking system there will be no interest rates on demand deposits time deposits bonds etc the prime lending rates on loans given by banks will be just 2 to 4 only the loans will be given upon mortgage of movable and immovable properties and shares or on personal incomes there will be no loans on deposited checks and demand drafts or other instruments of money here the money will have only exchange value and it will not have storage value money will be purely utilised as medium in exchange of goods commodities shares physical and intellectual works there will be absolutely no incomes on stocks of money an individual will have to spend exactly what he earned saved inherited donated or gifted the cycles and velocity of the total money in the system will be even and constant top tax system s main savings account msa will have five folders for money shares/stocks bonds derivatives movable property immovable property and family the sub savings account will have only one folder for money the corporate account number will have seven folders for money movable property immovable property securities raw materials and other inputs man power manufactured products the first folder of all these three accounts will be used for storage and usage of money for personal or business or industrial purpose for detailed usage of these accounts please see page number 15 to 22 in top tax system there will be zero interest rates on time deposits demand deposits government bonds etc the prime lending rates will be just 2 per annum on loans up to 10 lakhs and 4 per annum on loans above 10 lakhs top tax system suggests the cash reserve ratio crr permanently at 10 an individual s first folder of main savings account contains his/her entire money got from earnings savings donations inheritance and loans taken if any this money is called liquid money that means liquid money is both real money and loan money the first folder also contains a subfolder called debt folder this debt folder contains all aggregate loans taken by an individual from banks upon mortgage of his/her movable and immovable assets as recorded in the second the third and the fourth folders of his/her main savings account the loan money is called debt money similarly the borrowings of money loans for industries run by corporate companies or public companies will be recorded and maintained in the sub folder called debt money folder of corporate account numbers cans of those companies the total loans/advances given by all banks recorded as debt money in dept money folders of msas please visit http www.optimaltaxation.net page 2

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all economic ills ­ one pill top tax system and cans should not be more than 47.37 if crr 10 of the total money supply/liquid money money which includes both real money and loan money in all msas ssas cans and banks own capital money the total money liquid money recorded in msas ssas and cans belonging to people banks companies institutions organisations and government is the total money supply in the economic system the debt money/loan money recorded in the debt folders of msas ssas and cans is loan money in the banking system the total liquid money minus the debt money is equal to total real money the exact figures of total money supply real money loan money and variations in demand for loan money in the economic system can be obtained at any specific time the money folder of bank s account will have its capital money and profits it is called capital money/fixed money it is called as fixed money because it cannot be given as loan as real money the bank s capital money will be used to pay salaries and towards other operating costs of that bank all the loans given by it will be recorded in another sub folder called loan money folder its numerical figures should be in red colour every time the bank gives loans the bank s capital money/fixed money should not be changed but the given loan money will be added to the bank s loan money account in loan money folder correspondingly the loan amount will be added to the liquid money account of msa or ssa or can who has taken that loan and at the same time the loan amount will be recorded in the debt money folder of the same msa or ssa or can when a loan is repaid the principle amount of that loan will go in to the loan money account of that bank account and loan amount in red colour decreases by the repaid loan amount but the interest amount of that loan should be credited to the bank s capital money/fixed money similarly whenever a loan is repaid through any msa or can the paid amount will be decreased from both the liquid money account and debt money account of the same msa or can please note that when bankx gives loans its capital money/fixed money would not change but increases when interest on loans paid to it and decreases when bankx s salaries and other operating costs are paid bank s salaries and other running/operating costs should be paid from the capital money/fixed money of the bank s account so the capital money/fixed money minus the initial capital are banks profits if the capital money/fixed money in the bank s money folder are less than the bank s initial capital investment that means the bank incurred losses the top tax system suggests crr cash reserve ratio to be around 10 the total loans/advances given by a bankx recorded in the loan money folder of bank s account should not be more than 47.37 if crr 10 of the total money stored in all msas ssas cans operated by all its branches and bankx s own capital investment/liquid money and profits if any the total money/liquid money in all msas ssas and cans invariably includes the real money and loaned money generated by the banks but the bank s capital money/fixed money is purely real money this total money will keep changing continuously so the average total money of all accounts for one year of all branches of that particular bankx should be taken in to account while giving loans this ever changing average total will be automatically available every day by computer software system itself at the same time the total loaned money/advances of all the branches of bankx should not exceed nine times the value of that particular bankx s capital money/fixed money at no time the bankx s loan money/advances in the loan money folder should exceed nine times the bankx s capital money/fixed money and more than 47.37 of the total money 0r 90 of real money in all msas ssas and cans operated by it and its own capital money/fixed money the total loans/advances recorded in red colour in loan money folders given by all banks throughout please visit http www.optimaltaxation.net page 3

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all economic ills ­ one pill top tax system the country should be equal to all debt money/loan money taken by individuals and companies recorded in debt money folders of msas and cans the possible cash reserve ratios and corresponding loan ratios to total money are as follows if crr 5 then loan ratio 48.71 if crr 6 then loan ratio 48.45 if crr 7 then loan ratio 48.19 if crr 8 then the loan ratio 47.92 if crr 9 then loan ratio 47.64 the maximum loan/credit that can be lent as loan by banks on the real money 100 will be 90 and the total money in circulation will be 190 it will be called as liquid money in other words when crr 10 then the total credit that can be generated lent and added to the real money will be up to 90 of real money it is the self money supply of banking system suggested by the top tax system the total capital money/fixed money of all banks in the country should be at least one ninth of the total loan money recorded in the debt money folders of all msas ssas cans and one ninth of the total loan money recorded in red colour in loan money folders of all banks as the bank s profits increases the capital increases the bank s profits will be known every day every hour and every minute even to a layman the maximum profit a bankx with all its branches can achieve in a financial year the average annual simple interest 3 x 9 times of its capital money registration charges ­ operating cost that means profit 27 of its capital money registration charges ­ operating cost the minimum profit a bankx with all its branches can achieve in a financial year simple interest 3 x 0 .9 times of its own capital money when no real money is available in all msas ssas and cans operated by it registration charges ­ bank s operating cost so the profits depend upon the total money available in all msas ssas cans the bank operates and bank s own capital money this is the self regulating system of money supply in the economy the bank s cash reserves to be lent as loans decreases if real money in all msas ssas and cans operated by it decreases there will be slight variation in total money supply in the banking system at the end of every day when loans are repaid to the banks the total money supply decreases and money supply increases when loans are given by banks that means when loans are repaid the money will get out of the money supply and loans are given the money rejoins the money supply total money supply will get adjusted itself in the banking system to the needs of changing demand for loans without depending on the external regulators there will be no need for central bank to borrow money from commercial banks to drain out excessive money in the banking system banks will not borrow from central bank and vice versa there will be no repo and reverse repo rates in top tax system in top tax system loan money will never be metamorphosed into real money unlike present system s money which is transmuting into real money over period of time here loan money is always loan money and real money is always real money if total real money in all msas ssas and cans p crr 10 annual average simple interest 3 operating cost of banks y and total registration charges of all immovable and movable properties x then the total profits per annum got by all banks in the country p-p/10 x 3/100 x ­y that means total profits 27p/1000 x ­ y that implies profits 0.027 of p x y in simpler terms the profits for all commercial banks in a country is equal to total loan money x 3/100 these maximum profits will have to be shared by all bank operators in the country each bank operator s profit will depend up on the real money available in all msas ssas and cans it operates so the bank operators will vie with one another for more accounts by providing prompt and quality services to its customers real money means total liquid money minus total loan money/debt money given by banks for example at reserve ratio of 10 for each 100 of real money owned by people government banks and companies there please visit http www.optimaltaxation.net page 4

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all economic ills ­ one pill top tax system will be loan money of 90 at the maximum that total money supply can reach the maximum of 190 depending upon the demand for loan money the real money percentage will be at the minimum of 52.63 of total money supply and loan money percentage can reach up to 47 37 of total money supply or 90 of real money if reserve ration 10 if there is enough demand for loan money the bank profits will depend upon this percentage of loan money which may vary slightly from time to time please see page number 39 to 41 for possible operating cost of the banks and their profits bank s capital investment cannot be withdrawn from the bank unless it is exceeded one ninth values of its total loans given in other words only the extra money which means profits over the initial capital investment can be withdrawn from the bank by its promoters top tax system ensures that money supply does not get stagnated in the financial system as excess reserves because of these following factors the first one is the profit tax which constantly pumps money back in to the financial system the second one is the limited paper currency which totally removes black money a stronghold of stagnated and hibernated money in recession periods the third factor is low interest rates and faster sanctioning of loans because all components of money and wealth are recorded stored maintained and used in the same msas and cans every year additional real money equalling 52.63 of the value of the growth in the gdp minus the value of the growth if any in the exports when compared to last year should be added to the government account out of thin air at the time budget presentation to check deflation and recession that means there will be fresh real money originated from government s account added to the money supply every year if there is no growth rate there will be no fresh real money and if there is negative growth rate the reserve ratio will have to be increased this scenario will never happen in top tax system unless there is unforeseeable calamities like massive earthquakes third world war etc in top tax system there will be only two regulators ­ cash reserve ratio and top tax to maintain smooth functioning of economic system the major portion 50 of this added money should be allocated towards pensions to senior citizens who have no or paltry incomes the remaining portion shall be allocated to welfare schemes health care services and education and infrastructure sectors once this real money is added and merged in the circulating money loan money up to the maximum of 47.37 of the value of the growth in the gdp minus the value of the growth if any will also be generated through loans as debt money/loan money by the banks and added to the circulating money in the finance system the banks profits will increase through interests on this additional loan money every year top tax system suggests that total liquid money real money and debt money/loan money to be necessary for circulation in banks should be at the minimum level 100 and at maximum level 110 of the value of gdp of the country gdp is classified into two types one type is consumed within one year and non re-saleable the other type of commodities will be converted into re-saleable assets like movable and immovable properties and carried in to next financial year the money supply equalling 110 of the value of gdp will meet the need for exchange of total gdp produced in a year in addition to the already existing movable and immovable properties shares gold and ornaments which are accumulate over the years assuming that each commodity/service is changed hands at an average of three times in the consumer retailer dealer and manufacture chain the cycles of the total money supply in the circulation will have an average of four to five cycles per year the revenues from 4 top tax on all money transfers from one account to another account will go to state and centre s combined account sacca in each state 3o out of these please visit http www.optimaltaxation.net page 5

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all economic ills ­ one pill top tax system revenues will go in to central government s account these flows will be continuous and unabated as long as bank operations continue during the day in the present system all banks have one common weekly holiday apart from national holidays but in top tax system while half of the bank branches will have one weekly holiday say sunday the other half of the banks will have another weekly holiday say wednesday the incoming tax revenues will get transferred from sacca s and central government s account to various ministries accounts of states and centre according to percentage allocation made in the budget as said earlier every year additional real money equalling 52.63 of the value of the growth in the gdp minus the value of the growth if any in the exports when compared to last year should be added to the central government s account out of thin air at the time of budget presentation there will be also revenues from sale of natural resources like minerals ores air waves etc in addition to revenues from psus and other assets apart from these revenues the central government or states can borrow loans from banks upon mortgage of government assets the top tax system suggests that this statutory liquidity ratio can be at the maximum of 24 the government spending will be equal or less to its total revenues and there will be no fiscal or revenues deficits from these accounts the funds will be transferred to various departments sections institutions and from there the funds travel up to village level and finally reach people in the form of welfare schemes like education healthcare sanitation monthly rations pensions infrastructure facilities and all other services the incoming revenues and outgoing expenditure will be fully transparent as clear as crystal this way the top tax system will make the budget preparation of any country to be easy simple and time saving exercise foreign currency exchange when people need foreign currency for tours education and imports or fdi goes out the money will be decreased from his/her msa or can in case of companies or fdi and the same amount will be increased in government or central bank account and its foreign currency will be decreased from the same account when people who works there or companies which exports or fdi bring foreign currency the foreign currency in government or central bank s account increases with decrease in money in its account while the money in those accounts who bring money increases the total money liquid money debt money/loaned money shares/stocks movable properties and immovable properties of individuals or industries will be stored recorded maintained and transformed in the same accounts of msas and cans the movable and immovable properties can be mortgaged and transformed in to liquid money for personal business or industry purpose since all the money debts shares and assets are recorded linked and covalently bonded together under different folders in the same main savings account in the case of individuals and in the corporate account numbers in the case of companies the process of loan sanction will be faster and smother there will be no defaults on loans and nonperforming assets called npas once the loans are repaid the assets will be released from mortgage instantly the total real money and debt money/loan money the real assets and mortgaged assets of an individual or a company can be easily distinguishable in the present system money shares movable and immovable properties are recorded and maintained by different institutions departments and agencies loan money/advances are maintained in separate accounts so the real money and loaned money/credit money are mingled together beyond recognition and not easily distinguishable by cursory study of the accounts the present system s multiple generation of money supply through loans on loans is actually please visit http www.optimaltaxation.net page 6

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all economic ills ­ one pill top tax system dwarfing the real money and causing uncontrolled inflation and accumulation of money in a few pockets read full article 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 to relieve 7 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 0.3 and dematerialised money 99.7 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 eight parts 1 tax structure and direct benefits of the top tax system 2 method of implementation of top tax system 3 limited paper currency 4 money supply and monetary policy 5 operating cost of the top tax system please visit http www.optimaltaxation.net page 7

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all economic ills ­ one pill top tax system 6 comparative study of tax revenues between present system and the proposed top tax system 7 advantages of top tax system 8 summary of 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 slab rate=20 tax by centre 20 4 customs duty by centre optional slab rate nil excess land tax states and centre combined optional state excise by states nil 5 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 please visit http www.optimaltaxation.net page 8

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all economic ills ­ one pill top tax system 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 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 30 to 40 more than the 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 9

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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 10

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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 only 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 11

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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 12

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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 13

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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 14

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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 15

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