Economic Survey invokes religion to stop tax evasion

Economic Survey of India 2018-19 invoke God Religion to stop Tax evasion and willful default. (Photo PIB Twitter)

India is a country known for cultural, religious and linguistic diversity. Invoke the doctrine of "pious obligation" as well as blend principles of behavioural economics with spiritual norm to tackle tax evasion and wilful defaults, suggests the Economic Survey.

Bringing in a sense of novelty into the survey, that provides a detailed picture of the economy in 2018-19 and the way ahead, tenets of Hinduism, Islam and Christianity have been cited extensively to tackle debt woes and tax evasion.

Such suggestions find a place the chapter titled 'Policy for Homo Sapiens, Not Homo Economicus: Leveraging the Behavioural Economics of "Nudge"'.

Tabled in the Parliament on Thursday, the survey said that decisions made by real people often deviate from the impractical robots theorised in classical economics.

Drawing on the psychology of human behaviour, it said that behavioural economics provides insights to nudge people towards desirable behaviour.

The 'doctrine of pious obligations' could be invoked to encourage people to clear their debts and also pay taxes, the survey, prepared by a team led by Chief Economic Adviser K V Subramanian said.

"Given the importance of religion in the Indian culture, the principles of behavioural economics need to be combined with this 'spiritual/ religious norm' to reduce tax evasion and wilful default in the country," it noted.

In Hinduism, non-payment of debts is a sin and also a crime. The scriptures ordain that if a person's debts are not paid and he dies in a state of indebtedness, his soul may have to face evil consequences, according to the survey.

Therefore, it is the duty of his children to save him from such evil consequences. This duty or obligation of a child to repay the debts of the deceased parent is rested upon a special doctrine, known as the doctrine of pious obligation, it said.

The survey says in Islam, Prophet Muhammad advocated, "Allaahummainnia’oodhibika min al-ma’thamwa’lmaghram (O Allaah, I seek refuge with You from sin and heavy debt)." A person cannot enter Paradise until his debt was paid off.

All of his wealth could be used to pay the debt and if it is insufficient then one or more heirs of the deceased could voluntarily pay for him, it said.

Quoting Bible, the survey said, "Let no debt remain outstanding except the continuing debt to love one another - Romans 13:8" and "The wicked borrows and does not repay, but the righteous shows mercy and gives -Psalm 37:21."

Economic Survey 2018-19 quote religious scriptures and laws to reduce tax evasion and willful default.
Economic Survey 2018-19 quotes religious scriptures and laws to reduce tax evasion and willful default.

The survey said that in India, where social and religious norms play such a dominant role in influencing behaviour, behavioural economics can, therefore, provide a valuable instrument for change.

"So, beneficial social norms can be furthered by drawing attention to positive influencers, especially friends/ neighbours that represent role models with which people can identify," it said.

Also, as people are given to tremendous inertia when making a choice, they prefer sticking to the default option. By the nearly costless act of changing the default to overcome this inertia, desired behaviour can be encouraged without affecting people's choices.

Further, as people find it difficult to sustain good habits, repeated reinforcements and reminders of successful past actions can help sustain changed behaviour, the survey said.

Pointing to religious laws and quoting scriptures, the Economic Survey 2018-19 says that principles of behavioural economics need to be combined with the spiritual/religious norm to reduce tax evasion and wilful default in the country.

 

(With inputs from PTI)

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