It’s official; political bribery is tax-free. Ask the taxman

[MAGNeT]

Anna Hazare, here’s your next cause. Your crusade to create a Jan Lokpal to tackle bribery and corruption is far from over, but meanwhile law is moving in the other direction.

Even though the government has taken no view on making low-level bribes legal —as suggested by Chief Economic Advisor Kaushik Basu and supported by NR Narayana Murthy—the tax authorities are busy making big-time bribes legal —through the back-door route.

The Income Tax Appellate Tribunal (ITAT) has ruled that the four Jharkhand Mukti Morcha (JMM) MPs who took bribes from the Congress party under PV Narasimha Rao can not only keep the money, but also needn’t pay taxes on it. The bribes were paid to get them to vote with the government in the 1993 confidence motion when the Congress was short of a majority.

So are political bribes fully legal now?

Not quite. What the ITAT has done is buy the fiction that the money received by JMM members for voting with the government was in the nature of a “political donation.” Since political donations are tax-free (one wonders why politicians need bribes then), the crores paid out by the Congress are thus tax-free.

Neat, that.

This is the third time our law-makers have ended up supporting what appears like a bribe to everyone else. In the first instance, Parliament, which has the right to examine the conduct of its members, didn’t bother about taking the JMM MPs to task.

Contrast this with its attitude in 2005, when another Congress-led government (UPA-1) made a big issue of MPs accepting cash for asking questions in parliament. An ethics committee was quickly formed and 11 MPs were expelled by Parliament in a sudden attack of conscience. Is it any surprise that most of the MPs belonged to the Opposition?

But, clearly, when it is a question of saving a Congress government, ethics don’t matter. The bribes paid to JMM members went unpunished by Parliament.

Next, the courts, too, let off the Jharkhand MPs. The Supreme Court in 1998 held that the MPs who cast their votes committed no crime that the legal system can act on. Reason: the conduct of MPs in parliament is judged by the house, and the courts could not get into this area.

Now, for the third time running, the MPs have gotten lucky. This time it is clear that they won’t even pay tax on the bribes they received.

This is the history, for those who came in late. In July 1993, four JMM members of parliament, along with seven members of the Janata Dal, were allegedly paid Rs 8.7 crore as bribes to get them to save Narasimha Rao’s government in the trust vote.

(Coincidentally, 15 years later, the Congress-led UPA-1 government is alleged to have used bribes to secure its trust vote in the cash-for-votes scam. But surprisingly, the sting operation, now seen as something authorised by the BJP to entrap the UPA, has again spared the Congress. While two ex-BJP MPs and Amar Singh are in jail, the main beneficiary of the vote—the UPA—is watching the fun from the sidelines.)

But the JMM tax-free bribe goes one step further. It not only lets the bribe-takers go scot-free, but actually ensures that they are rewarded for it by sparing them tax.

Here’s how the arguments went at ITAT, according to an IANS report. The lawyer for one of the bribe-takers, Simon Marandi, told the judicial member of ITAT, RP Tolani, that political parties form alliances, agree to cooperate and compromise with each both inside and outside parliament.

“JMM and Congress had agreed to cooperate with each other. The Congress party approached the JMM party to help it in the national interest and not to vote against the Narasimha Rao government in parliament,” Marandi’s lawyer told ITAT.

The JMM’s reason for accepting the bribe was painted as truly patriotic. The counsel told ITAT that JMM agreed to not vote against the government as the country was going through a difficult phase, with unrest in Punjab, Jammu and Kashmir and the north-east, not to speak of the economic crisis. This was why they agreed to help the Congress survive the trust vote.

What is difficult to digest is the JMM members’ claim that the “bribe” was paid by the Congress voluntarily for the welfare of the people of Jharkhand.

Wow! Now we know how altruistic political motives were in 1993.

The irony: Narasimha Rao himself was convicted for bribery in 1999. The four JMM MPs—of whom one turned approver—Suraj Mandal, Shibu Soren, Simon Marandi and Shailendra Mahato—are now laughing all the way to the bank. Without a detour to the taxman’s office

It’s official; political bribery is tax-free. Ask the taxman | Firstpost

Can someone give me a ticket for a political party .....

 

[Metalspree]

I am planning to start a political party after i am back to India coz working my @$$ off is of no use.

 

[cyberwarfare]

Disgusting

 

[vivek.krishnan]

Any1 interested in making their own political party or have invites to join one? Count me in!

 

[logistopath]

Way to go...!

 

[Vasishta.Sushant]

Wow. I love my India. Rotten to the roots.

 

[TEUser2K1]

In fact, this announcement was there in last budgetary talk or somewhere and no one did talk about.

I mentioned this with my colleagues in office, no one did have a clue.

The moment I heard this, it reminded me of the state of affairs in USA, donation done by MNCs there and its adverse effects, film Inside Story, etc.

Some where there was a news item showing amount paid by Indian corporates to all political parties in tune of crores.

This is a real bad thing which needs to be killed immediately.

 

[blr_p]

Re: It’s official; political bribery is tax-free. Ask the taxman

The moment I heard this, it reminded me of the state of affairs in USA, donation done by MNCs there and its adverse effects, film Inside Story, etc.

So you're not in favour of legalising corporate contributions to political parties like happens in the US ?

You don't think this will reduce the black money in electoral finances. Make it more transparent, who is paying whom and how much.

Some where there was a news item showing amount paid by Indian corporates to all political parties in tune of crores.

How did they get the info, its illegal atm so how credible will the report be ?

 

[TEUser2K1]

How did they get this info - at least the legal part of contributions are open in public - link below explains it:

REVEALED: How parties gain heavily from donations - Rediff.com News

its an old link I bookmarked, just have this weird behavior of keeping useless stuff bookmarked Now a days I have stopped this habit, am numb now with all these.

Indians need to do a real life, rational, statistical, analytical and humane study on contemporary state of life and affairs in USA - considering that we are an emerging nation (I feel its not that good, in fact its depressing, but we can learn a lot from it) as history, human behaviour, etc., repeats.

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A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years.

Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage.

-----

The above quote is known to everyone. The issue here is USA is exporting their own set of problems to entire world since we are all in a free market globalised world now.

 

[blr_p]

Re: It’s official; political bribery is tax-free. Ask the taxman

How did they get this info - at least the legal part of contributions are open in public - link below explains it:
REVEALED: How parties gain heavily from donations - Rediff.com News

its an old link I bookmarked, just have this weird behavior of keeping useless stuff bookmarked Now a days I have stopped this habit, am numb now with all these.

That was a good link, must admit i'm a bit mystified right now as to why some ppl think corporate donations need to be legalised as you can see the names of all the donors that have submitted over Rs.20k. Bharti airtel is the biggest contributor, surprised not to see reliance in there at all.

Even the article itself says that more transparency is required. Ok, there is no record of those that send cash, but no indication is given in the article nor the report whether cash makes up a significant share of donations or not. Nor is there any insinuation that cash donations are not recorded in the income tax reports of the political parties in question.

So what need for transparency are they referring to. This is important because Hazare is likely to push this angle soon.

Indians need to do a real life, rational, statistical, analytical and humane study on contemporary state of life and affairs in USA - considering that we are an emerging nation (I feel its not that good, in fact its depressing, but we can learn a lot from it) as history, human behaviour, etc., repeats.

We can certainly learn a lot from them but why limit ourselves to just the US ? We should look to the whole world for best practices.

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years.

Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage.
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The above quote is known to everyone.

You piqued my interest, as i could not recall it

The Truth About Tytler

First question is to find out WHO exactly said that WHEN and in WHAT context. As you read the link you will see the researcher finds that isn't very clear and concludes...

these quotes were probably coined by separate individuals in the first half of the twentieth century, and I'm comfortable in concluding that Henning W. Prentis, Jr. is the author of the Fatal Sequence, unless further earlier evidence comes forward. In the original version of this article, when the evidence was inconclusive as to the author of either quote, I wrote that the authors of each half were most likely not famous persons or respected scholars, but rather just private political thinkers who got their words in print, and whose words then happened to strike a chord in others. The identification of Mr. Prentis as the author of Fatal Sequence bolsters this interpretation; the Fatal Sequence was not coined by a political figure or noted historian, but rather the president of a cork company. The passage of time merely encouraged quoters to attach an author's name that strengthened the authority behind the words.

And that is where the vice of misattribution lies. Perhaps the words speak the truth of democratic governments; or perhaps they do not. But either way, attributing the words to a scholar who never spoke them is to lend to them an authority and reliability that they do not deserve. Quotations should not be given fictitious attributions merely to lend credence to the messages they impart. To do so is to favor persuasiveness over accuracy, and to sacrifice truth for the sake of image.

The issue here is USA is exporting their own set of problems to entire world since we are all in a free market globalised world now.

We've been pretty well insulated thanks to the RBI. If it wasn't for globalisation a lot of ppl here would not be making anywhere near the money they are currently making. So there's good & bad.

 

[TEUser2K1]

If you check in internet, there are numerous links on the same matter. Its only that there is no common consensus on what to do. People are losing their collective power to stand against current day powers, it seems. They have turned in to 'wage slaves' or 'sheeples'.

Yes, there is good and bad to all these. But we Indians have our own humane values (at least used to have), these days we are skewing towards bad which is natural considering greed drives capitalism. There needs an 'Indian way of capitalistic practices'.

RBI didn't save us from anything, rather if you give devil it's due, the regid and relentlessly opposition parties in India opposing too many quick changes by Congress ealier, unwittingly caused the so called insulation to be in force.

No corporate give money to anyone just for sake of making charity. They take undue advantage of any situation. It is not good to have a political corporate nexus to drive a country.

 

[blr_p]

Re: It’s official; political bribery is tax-free. Ask the taxman

If you check in internet, there are numerous links on the same matter. Its only that there is no common consensus on what to do. People are losing their collective power to stand against current day powers, it seems. They have turned in to 'wage slaves' or 'sheeples'.

The trouble with this interpretation is its completely upto what your political position is. What is the objective take here. That is what counts. From my pov anything that increases investment in the country is always a net win.

Yes, there is good and bad to all these. But we Indians have our own humane values (at least used to have), these days we are skewing towards bad which is natural considering greed drives capitalism. There needs an 'Indian way of capitalistic practices'.

We already tried that after independence and bankrupteds the country by 1991. So how sustainable was this 'indian way'. Now of course things are going in the opposite direction, there are excesses to be sure but i see this as evening out over time. As more regulations and checks enter into the system.

RBI didn't save us from anything, rather if you give devil it's due, the regid and relentlessly opposition parties in India opposing too many quick changes by Congress ealier, unwittingly caused the so called insulation to be in force.

There is certainly some of this, Congress did not have support to carry on reforms because opposition parties were hell bent on introducing obstructions. But thats what a democracy is. A slow move is better than a fast one. So long as the steps taken over time make us stronger. Since 1992, i've seen no reason to doubt this. We've built up a momentum that would be difficult to arrest.

No corporate give money to anyone just for sake of making charity. They take undue advantage of any situation. It is not good to have a political corporate nexus to drive a country.

This is a difficult one to call. When corporates make donations to political parties they are expecting a good climate to be created, one that encourages more investment and profit making opportunities. They want less regulations and taxes because these kill investment & business over the long run.

The argument here is do we listen to the ppl with the money who can create jobs & value here or not. Otherwise they will invest abroad instead. The game is always about keeping the money inside the country and attracting even more. Its a difficult balance to achieve sometimes it swings too much in one direction or the other.

What scares me is an anti-corporate stance i notice of late in the country. because of inflation and maybe unemployment there is is general unease if other ppl are profiting just because they are being successful. Over time this has a tendency to spoil the party for everybody. Reforms 2.0 has been long held back because no party wants to mess with 8% growth rate. This of course only beenfits the middle & upper classes more than the lower who would say they've not seen too much improvement. But that in itself isn't very accurate, because we've defnitley lifted a lot of ppl out of poverty over the last twenty years. I think this line is a bit overblown amongst the left parties, they've got to say something because they've not really had a very good run in politics. Fortunately for us because their idea is to make everybody equal, unless that is achieved then we must be unhappy or worried about those that make more.

 

[TEUser2K1]

By mentioning 'Indian Values' I didn't mean all its negative aspects, at least in this century, we can behave civilised, be innovative and practical.

"When corporates make donations to political parties they are expecting a good climate to be created, one that encourages more investment and profit making opportunities. They want less regulations and taxes because these kill investment & business over the long run."

Why good climate can't be created without bribe /legalised bribes ? In may cases, its known that politician is a weak guy, a pawn in the hands of big corporate business. A politician an individual, a human being, who can be tarnished by a corporate behemoth in minutes in current day callous media. And people will sing the tune of media without any introspection.

"They want less regulations and taxes because these kill investment & business over the long run."

Less taxes, I can understand. But less regulation ? Aren't good regulations in the best interest of the country and it's people and business in long run ?

Yes, we need investment & business and all, but what will we all have to forgo for this and how much ? Is there any clarity on that ?

May be I follow articles from Marc Faber mostly, thats why I have got different ideas.

 

[blr_p]

Re: It’s official; political bribery is tax-free. Ask the taxman

By mentioning 'Indian Values' I didn't mean all its negative aspects, at least in this century, we can behave civilised, be innovative and practical.

Aren't we doing that already ?

Can you expand on what you mean by 'indian values' ? What idealogy are you referring to there ? Where has it been applied ?

Where were the 'Indian values' during the license raj years. I would say that was the worst of socialism. After liberalisation some would say now we are following the worst of free market policies. We always seem to get the worst of both worlds instead of the best. But thing is we did not have a crisis like the US did, they veered to the extreme. In a way we were sheltered and never got that far.

One lesson that can be learned from that experience is to never let Dalal St become as influential on domestic policy as Wall St was in the US. If you let the finance firms get too big then the incentive is to make as much as they can and eveything else can take a hike. Thats one danger we can avoid easily, as the ruppee isn't a global hard currency let alone a reserve one nor do we control as much global capital as Wall st did.

Why good climate can't be created without bribe /legalised bribes ? In may cases, its known that politician is a weak guy, a pawn in the hands of big corporate business. A politician an individual, a human being, who can be tarnished by a corporate behemoth in minutes in current day callous media. And people will sing the tune of media without any introspection.

You could create a good climate with less bribes but then we won't see the high growth rates that we see now or have seen in the last five years. Growth is nothing but increase in investment, if the terms are good more investment gets made because then there is the expectation of a return. So that's your tradeoff.

Less taxes, I can understand. But less regulation ? Aren't good regulations in the best interest of the country and it's people and business in long run ?

Both together work for business, if there is only one then things are less attractive. Its a hard balance to achieve. The easiest thing is for politicans to look for money, if they can attract investment to their village, city, state or country. More is better.

Yes, we need investment & business and all, but what will we all have to forgo for this and how much ? Is there any clarity on that ?

There will be more scams. What the media does is bring out that element and blow it up out of proportion. what % of the economy do these scams make up anyway ? Are they in the minority or not. They do not say this at all, they just mentioned thousands of crores and everybody has a heartattack as they have no frame of reference and think the country is being looted.

If its to do with mining then there will be pollution and damage to the environment. The only way you know what the cost is, when the line was crossed is when ppl start protesting and demonstrating. That usually a good sign that somebody's getting screwed.

May be I follow articles from Marc Faber mostly, thats why I have got different ideas.

He strikes me as a contrarian, so what are his suggestions here ? What advice can he offer for India ?

Remember the choice is between close to dbl digit growth or 3-5% growth. As a market matures the growth rate will automatically drop, the big question is do you want to force that or not ie mess with it. How much can you gain, how fast before it inevitably lowers. That to me seems like the optimal path. It's not perfect, there is no free lunch.

This is why we've not had more reforms, which would affect more sections of society, politcos are scared of messing with the growth rate and with good reason.