The government wants documentation of the economy without taking any serious step and this has failed many times in the past. There are several untaxed sectors which need to be brought under the tax net by simplifying the collection procedure and devising a transparent environment for taxpayers. To achieve the goals, there is a need to develop a mechanism which should automatically involve businessmen in the process of documentation. Currently, several laws are enforced and various mechanisms from tax applications to collections are in place. But laws and mechanisms both are in a state of fragmentation. There is a need to simplify laws, rationalize tax rates and develop a unified mechanism to apply on every individual coming under tax slab. The business climate is worse than it appears to be due to various reasons. There is no specific guideline for the potential businessmen and investors and in many cases they are caught unaware by the government agencies.
The documentation should be the first official requirement to start a business no matter it is small or large and it has to be registered with chamber of commerce and industry. No vendor or kiosk should open without registration with a chamber and a specific fee, even if it is nominal, should go to the government exchequer. In the beginning an annual fixed tax can be imposed on a business concern but the government should also offer facility to the taxpayer against the money it receives. The government should also remove ambiguities in various laws and methods and should develop tax collection system according to the ground realities. The absence of a mechanical method breeds many troubles in the process of tax collection. However, undocumented economy has its own merits and demerits and it will be difficult to register everything in a row. It is a process and will take time till it reaches its logical end.
In some cases, the people have the money, but they don’t know how to start a business and how many government agencies will be involved in it. There is a need to establish a facility centre for new entrepreneurs to educate them and help them set up their businesses. But the most important factor in the whole exercise is the capacity building of the government officials. They should work as facilitator, but any attempt by the officials to act as stumbling block should be foiled in the start. The banking system also needs to be localized to facilitate the business community. The government has to start homework before acting against the non-filers and the general public. Document of the economy is no doubt a moral and legal obligation of the government, but any attempt in this direction should not disturb the business environment.
