New Delhi, Dec 4 (IANS): Observing that free trade should also mean fair trade, Finance Minister Arun Jaitley Thursday asked revenue intelligence agencies to increase cooperation with their global counterparts to fight tax evasion and smuggling.

"Revenue intelligence officials must increase global cooperation to check tax evasion and smuggling. Effective steps to curb tax evasion and avoidance are necessary to ensure that free trade remains fair trade," Jaitley said while inaugurating the 2nd Regional Customs Enforcement Conference here.

The finance minister also called upon the officials to increase the use of technology and develop the ability to read between the lines to check financial malpractices.

Describing the changes underway globally where, with the decline in tax rates, tariffs and duties, the incentive for financial malpractice is going down, Jaitley said: "The world is obliterating the distinction between tax evasion and tax avoidance."

Replying to a debate on tax evasion and black money in the Lok Sabha last week, he had said the government is trying to move towards a tax-friendly system step-by-step towards erasing the "bad name" it has earned over the years

Calling for a tax structure which discourages evasion, he said there was a misconception that high tax rates bring in higher revenues.

"High tax rates do not necessarily mean more revenue collection. The direct and indirect tax rates have to be brought to reasonable level so that the basket increases and there is no incentive for evasion," Jaitley said.

"Those who have to pay taxes must pay taxes. Those who do not have to pay taxes, merely by raising demands does not serve any purpose as these get stuck up in courts. We cannot allow tax evasion or avoidance," he added.

The finance minister said taxation should be reasonable so that the tax base increases, there is no evasion and government expenses can be met.

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