What I wrote for the Economic Times Sunday Edition - 29/4/2012 - article produced below the image:
My Dear Finance Minister,
Before I come to the main point of my letter, may I inquire about your musical tastes? Do you like Indian or Western Classical music? Or does Rock, Jazz, Rap appeal to you? (p.s – please don’t say you don’t like music, else I shall retort quoting Shakespeare who said, ‘The man that hath no music in himself, nor is not moved with concord of sweet sounds, is fit for treasons, stratagems, and spoils.”)
You are a nice man, and hence, I am sure, you like some form of music.
Now, think about this:
Music is always played forward. It sounds beautiful, melodious and soothing when it rushes from one note to another in a ‘forwardly’ direction. If you reverse it, or play music backwards, it sounds awful.
Imagine a ‘RAAG’ being played backwards. Well, it sounds like ‘GAAR’!!
I hope I have scored my point with you by now. The ‘General Anti Avoidance Rules’ (GAAR) as positioned by you, sounds like music playing backwards. It sounds awful.
Now, let me be clear. I don’t like folks who ‘avoid taxes’ and make a fool of you or the government. I would personally punish the people who take advantage of tax loopholes to pay legitimate taxes because that is elegant cheating. Every day, every month and every year, I remit to you service taxes, income taxes and corporate taxes without a miss, so thinking of people who have not paid up makes me livid.
Having said so, let’s consider why playing the music backwards (or retrospectively in your case), sounds so bad. Why a Raag should not be played like a Gaar…
Horrible music makes people run away!
You may not be aware of this, but in Europe during non-working hours, large retail stores play ‘opera’ music on speakers outside their windows to scare away teenage looters! Young people hate the ‘operatic screeching’ so much, that they run away from there and don’t bother breaking in.
In the same way, your ‘retrospective’ music is scaring away private equity players, global funds and investment houses. A couple of them have shifted base to Singapore and many others are contemplating similar moves. The problem is the ‘retrospective’ concept that you seem to be obsessed about. I wonder why it’s so important, given that as a Country, we are now beginning to truly blossom and become globally relevant.
We have so much music to play; why scavenge for old sheet music and play them ‘backwards’?
Garbled music is confusing and disorienting.
Conjure up a scene where old VHS tapes or even DVDs are played backwards. If you were only watching the screens roll back, then you could still make sense of the storyline. But if you turned the volume on, the fast rewinding sounds would make no sense at all. It would all sound garbled and funny. Your department’s constant loud gongs about all deals being retrospectively examined and exhumed for tax avoidance sound just as confusing and disorienting.
As a businessman myself, let me tell you that I find the biggest comfort in ‘closures’. Whether good, bad or ugly, if a deal is done, it’s done. Business moves on and ‘forward’. But if you come and tell me that what is done will now be ‘undone’ and business can move backwards as much as forward, then I will get nauseous.
Music sounds better as it progresses not regresses.
Mr. Finance Minister, I wonder if you have ever heard ‘Baroque’ music? It was classical music invented and played around the 17th Century.
I have been to a few concerts that ‘recreate’ Baroque music, not just by playing the original scores of that music, but by also using original musical instruments of that period!
Let me make an honest confession. After a few minutes of charm and intrigue, Baroque music sounds very boring. It puts me to sleep. While this monotonous baroque music plays, I think of Beethoven and Mozart and the exquisite composition they wrote in the 19th century. I juxtapose old vs new music and prefer newer stuff. And ironically, this is also why today’s generation yawns when you make them hear the music of Beethoven or Mozart!
I’m afraid your constant Raag…. oops Gaar of bringing out old instruments to play old music is boring and sleepy. No one wants to listen to it.
Please tell us what you have in mind.
Today, if you go to a western classical concert, you receive a pre-printed ‘programme’ of what will be played. If you go for an Indian classical recital, the singer or musician will gently advise the audience what she intends to play and even provide some background. Similarly, I urge you to ‘communicate’ what music you intend to play, and do so fast! Keeping the entire country guessing is not a good practice. When audiences don’t know what they are going to listen to, they get restless and sometimes even leave!
Sir, I invite you to accompany me to a few musical concerts. They will refresh your mind and help you resolve the controversy around GAAR. And since I may still have your attention, may I suggest you rename your act ‘Rules, Acts and Avoidance Guidelines’ – a la RAAG, rather than GAAR?
It just sounds better!
Plentiful credit to Asha who edited the story and made it perfect.
Added on 16/1/2013
Yes! Chidambaram heard me and the rest of the community!!!
Retrospective law making is practiced through out the world. It's not new to India.
So, are you saying that it's just and fair to use tax-havens like Cayman Islands, Mauritius, Ireland etc ... to avoid paying tax in the host country?
Feels nice that your not so friendly rodinhood I wrote this in April!
read this in the morning and remembered this post of yours!!