Globally the Elites are watching what’s unfolding in India… and they are doing so with glee.
In case you missed it, India banned the use of the 500 and 1,000 Rupee bills on November 8 2016.
This is effectively a complete physical cash as these bills (both of which are worth < $10) represent 86% of all cash in circulation.
The country plunged into turmoil soon afterwards. But guess what?
The guy who pushed for this (Prime Minister Narendra Modi), remains in office. Everyone who signed off on it did too. Public outcry, while serious, didn’t have any real political ramifications.
More than this, the policy has INCREASED tax revenues for India.
Last week, while countering criticism that the economy was suffering from the war on cash, Finance Minister Arun Jaitley said tax figures told a different story.
He said income tax revenue rose 14.4% through Dec. 19, although he didn’t specify if he meant for the fiscal year or thus far in the demonetization program. Indirect taxes—including excise, and custom duties and service taxes—also rose a collective 26.2% up to Nov. 30, he said.
“What comes into the banking system gets identified with the person and therefore its impact on taxation and revenue collection is already being seen,” Mr. Jaitley said.
Let’s break this down simply…
· India effectively banned 86% of physical cash in circulation.
· No one who implemented this lost their job or faced any political consequence.
· Government taxes increased.
If you think the Elites aren’t watching this unfold with sheer delight you’re mistaken. Globally a war on cash has been declared. And India has now proved that it can be done with little consequence. The fact it INCREASE tax hauls (something every Government on the planet wants) is just icing on the cake.
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Chief Market Strategist
Phoenix Capital Research