UnoUniverse: A Witty out of the Box solution: Krishan Tyagi

The governments in the US and many European countries are very concerned, and very rightly so, about the problem of tax-evasion. Many of these governments have been pursuing some of the Swiss banks for information on their citizens who have deposited stolen tax money there, and some countries have even been engaged in heated discussions with the Swiss government regarding the secrecy surrounding the issue. In the developing countries, people and politicians talk about the rampant corruption in their bureaucracy, and the need to get rid of it. But everyone seems helpless and no effective step is taken to tackle the problem.

Well, the solution to these problems is quite at hand.

The problem of corruption, tax evasion and many other socio-economic problems can be solved totally by adopting banking cards as the only mode of payments. Abolition of currency notes and coins would abolish all illegal, corrupt, and dishonest practices. The evidence of illegal trading, illegal work, smuggling, drug pedaling, human trafficking and other socio-economic crimes would straightaway be available to the enforcement authorities.

As every customer would be paying through their banking cards, no business would be able to hide any transactions and under-report their sales. And, as the businesses would be making payments to their suppliers and employees also from their business banking accounts using the banking cards, there would be record of all their purchases, and there would be no chance of false invoices or receipts being submitted. This would solve the problem of under‑payment of the VAT/Sales Tax and the Income Tax.

Under that system, not only no tax evasion can take place, the black money sitting in the Swiss banks (and in other foreign countries) would also be forced to return to the country. That money cannot be brought back in the form of currency notes to the country anymore. It would be rendered worthless unless brought back through the duly recognized banking system. And, no one can bring any money into their bank account without having an explanation for that and paying all the dues on it. So, rather than letting their money being rendered worthless, the past tax‑cheats would prefer to bring it back to their country and pay the dues to their government. Like the speed cameras, different filters on bank accounts would do the tax inspectors’ work. Whenever any unusual amount of money (eg, black money presently sitting in the form of piles of currency notes, or money coming from a foreign country) enters a bank account, a filter would trigger an alert which would be received by the enforcement authorities who then can probe the matter.

In countries like UK and US, the system would also squash the problem of illegal immigration. No business would be able to employ an illegal immigrant, because there would be no “cash” to pay a person who is not entitled to work in the country. Now the records of paying workers’ wages would be in the business’s bank account. So, who would dare to employ an illegal immigrant! Bank accounts could have NI numbers on them. Illegal immigrants would no longer be able to breathe in the system.

Professional thieves would look for some other honest professions. Most of the thieves steal to resell those goods. But selling a good that was not obtained in a legitimate way through a bank account would simply mean inviting prison sentence. Even the potential buyers of stolen goods would be deterred by the fact that their purchase would get recorded in their bank accounts. Thus professional thefts would just vanish.

Similarly, it would be so easy to catch drug peddlers and human traffickers. Presently these crimes operate through "cash". The transparent system of paying through bank accounts would kill such crimes in the society. Even fraudsters would not be able to get very far. It would be easy to retrieve the money lost through frauds, as it would be sitting just as an entry in another bank account.

The days of banks being robbed and people being mugged for money would become history, as there would be no currency notes to be stolen.

There would be no queues in the banks for getting cash or depositing cash. There would be no need to visit a bank for day-to-day transactions. One would need to visit a bank only to open or close an account, or get some advice. The banks would not need big premises. Their staffing needs would also go down, and so their costs. So, the fee they charge from their customers should also be much less. Certainly, they would be able to afford that the payments up to a certain amount, let’s say $200/£100/Rs 1000, attract no charge. Thus the banking system would be more efficient and less costly.

In a country like India, there would be another enormous benefit. No government official would be able to take a bribe – not even a penny. They would have only one personal account at one point of time. Any money coming into their account would get recorded. Every government official’s (and their family members') bank accounts should have automatic filters. The moment they get any money coming into their account from any source other than their employer, they would be asked to explain that.

There would be immense benefits to the society, and it would reduce cutting the forests. To see how the idea would operate see the FAQ section below, based on the previous discussions on the subject. I think this simple idea can revolutionise the world. Activities such as kidnappings for ransom just cannot take place in the suggested system. The problem of fake currency just cannot arise. Foreign agencies would not be able to finance spying networks. Insurgency groups, illegal armies and militias cannot survive even one day (unless each and everything they need is smuggled from abroad for them). And, of course, the politicians would not be able to submit fake accounts of their expenses! As one of my English friends, the Yoga training consultant, Jacqui Matthews, said after reading the article: " What a wonderful world it would be!"

Banking Card Payment System

Frequently Asked Questions

How would the system work for an average person?

Every person of spending age would have a bank account and a debit card to go with it. All their wages/income would go into their account directly. And, whenever they have to make a payment, let’s say to a shopkeeper, they just present their bank card to the shopkeeper and the money would be deducted from their account.

For the knowledge of those who have never used a bank card, the shopkeepers have a card charging device. Its size is usually that of a television remote control – a bit thicker and shorter. The shopkeeper presses on its keys and enters the amount to be charged. The amount appears on the display window of the device. Then the shopkeeper inserts the card into the device. The customer checks the amount and enters a four-digit PIN. That’s all. The payment is made, and the money is deducted from the customer’s bank account. The transaction gets recorded and can be seen in the bank statement.

If I want to give some money to a friend or relative, how do I do that?

You just need to phone your bank, and instruct them to send that amount of money from your account to your friend/relative’s account. You would just need to give your bank the account number of your friend/relative. The money would be deducted from your account and added to your friend/relative’s account. It is called ‘telephone banking’. The second alternative is called ‘internet banking’. You go on the internet, log on to your account and pay into the account of your friend/relative.

If you’re lending the money to be returned in the future, it’s even better as there would always be the documentary evidence of your transfer of money to their account.

How would I pay a rickshawwala or a taxi-driver?

Every rickshawwala, taxi-driver, and other mobile professional sellers would have mobile card charging devices – like mobile phones, and they would be able to charge your card on the spot – just like a shop. As explained above, banks would be made to provide these devices to small self-employed people free of charge.

How would I pay gift-money to my relatives and guests?

You could order your bank to issue you ‘Gift Cards’ of various denominations such as Rs 10, Rs 20, Rs 50 and Rs 100 with 3-month expiry date. These cards would be of the size of a railway ticket, and you could give them to your relatives and friends the way you give currency notes at present. Your Gift Cards would have your name & bank details encrypted on them. The recipient would deposit the Gift Card into their bank account, and that amount of money would go from your account to their account.

What about the internet frauds? If some money is stolen from my account, what would I do?

The internet frauds are the responsibility of the banks. If any money is stolen from your account by someone through a fraud, it is the bank’s responsibility to get your money back.

Internet frauds take place even now. In the new system the advantage would be that fraudster cannot draw the money out of his account and run away. Depending on how soon the fraud is detected, the stolen money would still be sitting in one account or the other, and it would be much easier to retrieve the money. It would only involve reversing a few entries in the accounts, rather than trying to get the physical money back.

In a country like India, where a lot of people are still illiterate, how can such a sophisticated system be adopted?

What is required is a simple thing – Every person of spending age should have a bank account and a debit card to go with it. That’s all. Even now, the so-called illiterate people do recognise the numbers on the currency notes and the coins. And that’s all they need to do. They would just need to verify the figure that appears on the card holding instrument, which can be set to appear in different languages such as Tamil, Bengali and Gujarati, and authorise payment by pressing a four-digit PIN. Actually, with the bio‑metric technology already available, there would be no need to remember a PIN either. Instead, one would press a finger to authorise the payment. So, apart from the knowledge of numbers, no further literacy is required to operate a bank account or to use a bank card.

The requirement of the system – that every person would have a bank account and a bank card – is much easier to be met than the other measures contemplated to combat tax‑evasion and corruption.

Wouldn’t the corrupt people simply go back to barter system, eg, start using gold, to carry out their corrupt and dishonest practices?

No, they would not be able to do that. Firstly, there is only a limited amount of gold available in the economy – it is not like the currency notes that the government prints in abundance. The banks keep a very small proportion of the monetary resources in the form of gold. Secondly, since the economy would still be using money for exchanging goods and services, to pay a bribe in gold one would have to buy the gold by paying money, which would get recorded in their bank account. Any transaction that becomes unaccounted for would become a problem if there is an inquiry. And if anyone gets gold as bribe, they would need to convert that into money to make use of that. However, an illegitimately obtained good cannot be converted into money, because that transaction would get recorded in their bank account. And every transaction has to be explainable.

Ultimately, any object intended to be given as a bribe has to be bought by paying money, which would get recorded as a transaction in their bank account. And, if the goods are not bought for self‑use or a legitimate use, the illegal act being found out would only be a matter of time. And, unlike currency notes, in the suggested system any object that is not obtained legitimately cannot be exchanged for anything else.

If you have any other questions, please e-mail them to the author of this article at the following address: krishantyagi@hotmail.com.

This article has also been published in India Link International, Apr - May 2010 and UnoUniverse.info July 2010