India’s promise not to prosecute tax dodgers if they reveal their wealth has persuaded very few to come clean.
More than $9.8 billion in previously undisclosed income was netted during a four-month amnesty that expired Friday. That could translate into $4 billion in extra revenue for the government.
But the amount of money disclosed is a tiny fraction of the tax India should be getting from its 1.3 billion citizens.
According to a report by India’s state auditors, the government failed to collect over $105 billion in 2014-2015, 96% of which it labeled “difficult to recover.”
Then there’s the money that Indians have stashed away overseas. Government officials andinternational research groups have estimated that figure at more than $500 billion. The Panama Papers leak detailing offshore bank accounts, published earlier this year, featured at least 500 Indians.
Moreover, only 2% of Indians pay any income tax at all because most people work in the economy’s informal sector that includes jobs such as construction laborers and road side food sellers.
The tax amnesty program, known as the Income Declaration Scheme 2016, was heavily advertised over the summer. Prime Minister Narendra Modi used a radio address in June toappeal to the Indian public to take part.
This week, Modi hailed the “successful outcome” of the campaign on Twitter, after it was revealed that 64,275 people had declared untaxed income.
But in terms of getting what it’s actually owed, the Indian government still has a mountain to climb.