Quickies: Governments And Gold

     Where there is government, there is repression, suppression, and oppression. Governments particularly hate privacy, especially financial privacy:

     Finance Minister Arun Jaitley presented the government’s gold plan as part of the annual federal budget. Saying that gold import taxes will remain unchanged this year – dashing hopes for a cut.

     In fact, Jaitley actually announced an increase in taxes on gold sales. Saying that the government will add a sales tax of 1 percent to all gold jewelry sold in India.

     Such a sales tax had been scrapped by the government four years ago. But is now being revived by officials with the stated aim of reducing gold consumption.

     And that wasn’t the end of increased taxation on bullion. With Minister Jaitley also saying he will raise taxes on imports of dore gold bars – to 8.75 percent, from a former 8 percent.

     The “underground” portion of India’s economy is very large. Its “currency” of choice has long been gold, usually in the form of “jewelry:” unadorned gold circlets. Such circlets are worn by Indian women, on the forearms. When such a woman approaches certain categories of merchants, she endeavors to display her circlets without explicitly drawing attention to them, to evoke some off-the-books bargaining. Many entirely private, untaxed transactions are struck through this mechanism. The Indian government has been aware of it for some time, which is why it strives to curb the practice through import and sales taxes on gold.

     Now if only we could get Americans to adopt this device...and keep the government blind to it.