Wednesday, March 17, 2010

Lifestyle Audit

The South African Revenue Service (its acronym SARS is more menacing than its own approach to the tax payers) is coming under intense pressure from the country's public to conduct "Lifestyle Audits" of corrupt politicians. Also called "Financial Status Audit", this audit probes the consistency or its lack between the tax payer's reported earnings and expenditure. This development evidences a welcome enhanced sensitivity of the public to governance and rectitude.

Such audits need to be institutionalised in India where tax evasion and conspicuous and not-so-conspicuous expenditure disproportionate to declared incomes are pretty commonplace. If the income tax department becomes more professional in its approach and less amenable to political pressure, our fiscal deficit will get reduced atleast by a few basis points.

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