Tax evasion

Tax evasion is pretty widespread in India, and a lot of chartered accountants make a living out of suggesting creative ways to evade tax for their clients and channeling their "black money". I really don't understand why can't the government come up with ways to tackle it, when all of us see it and know how it is being done. I seriously believe the problem with this is "political will", since a lot of politicians will probably be at the receiving end.

Instead of being too negative about this, I was trying to think if there is some way to incentivize paying taxes. Can we offer something to tax payers, so that they feel good about paying taxes? I think one way to do that is to offer perks, for which the sole eligibility is being in a certain tax bracket. I feel we as Indians do crave for prestige and social stature and our tax department could exploit that to lure a few more eligible tax payers to pay up.

For example, we could have some convenient reserved parking at critical locations where parking is usually hard to find (connaught place!!), which is only accessible to people who pay more than certain amount in taxes. There could be free bypass lanes in all toll booths all over India for tax payers above a certain limit. There could be reservation for admissions in premier institutions. There could be exclusive premier residential enclaves where the eligibility to buy is based on your income tax bracket. I'm sure we can come up with all sorts of interesting incentives to make this work.

Obviously, the monetary cost of all these "benefits" will be trivial compared to the tax being paid to get them. But, if these are structured well, the "prestige" value of these will make them work. At some level, it may sound like reservations for the rich, but I feel that a little bit of creativity can help design something that is a win-win for all.

If such incentives are in place, society will play its natural role is helping this process as well. Imagine if I am a successful businessman, but don't pay any tax. The fact that I don't have access to any of these special privileges, even though I clearly make a lot of money, will expose me to my near and dear ones and I might decide to pay some taxes to avoid the ridicule (open or behind-the-back) that this will invite.

Crazy thought, but I wonder if someone has thought this through.