Reading Comprehension for SBI PO/Clerk 2018: 16 May
Directions (Q. 1-10): Read the passage carefully and answer the questions given below it. Certain words/phrases are given in bold to help you locate them while answering some of the questions.
Switzerland may no longer be a honeymoon spot for tax evaders. A new international standard of tax data sharing is set to make things harder for tax haven networks around the world that have in the past included Switzerland and tiny island nations and enclaves. But India would have to frame new laws to make use of the new system.
The new standard, radically different from the current system, aims to prevent wealth from flowing into financial “black holes” through a systematic global regime of information sharing.
Banks and authorities using secrecy laws to evade governments trying to hunt down black money hoarders could lose much of their power. Past offenders, who have so far easily escaped by moving assets, will be in a fix when information about them gets leaked.
The Organisation for Economic Cooperation and Development (OECD) presented a draft framework for the new standard and the finance ministers of the G-20, including India, endorsed it on February 23.
“$21 to $32 trillion is invested almost tax-free in the still expanding black hole of more than 80 offshore secrecy jurisdictions,” says a 2012 Tax Justice Network report.
In another report released last December, India is one of the top five countries in the world from where illicit money goes into tax havens. Global Financial Integrity figures show illicit financial flow from India was $343.93 billion (`2,126.52 lakh crore) in 2002-20011 with the amount of money leaving India rising alarmingly over the years.
The key change in the new regime will be that the current system of getting “information on request” will be replaced by an automatic information exchange based on reciprocal sharing. This would make obsolete old secrecy laws that demanded hard evidence before information could be shared. The new system will also help uncover complex trails of money hidden offshore.
“India, like all jurisdictions, will have to introduce domestic laws to enable financial institutions to collect and report information on the basis of common due diligence procedures,” said Stephanie Smith of the OECD Centre for Tax Policy and Administration. A tax identification number will also be provided in addition to financial information, to allow matching by the country of residence.
However, there are some loopholes. Vast amounts of illicit money are concealed through anonymity of contributors in trusts and foundations. Markus Meinzer, senior analyst of Tax Justice Network, says that the top 1% will get away unless the new standard ensures that information covers all of the foundation’s participants. Bank vaults currently also allow people to stash away their assets in other forms such as gold.
1. Why would Switzerland no longer be a haven for tax evaders?
1) Because the govt has made stringent laws against tax evaders.
2) Because a new international standard of tax data sharing is set to make things harder for tax haven networks around the world.
3) Because of anti-corruption campaign, tax evaders have become reluctant to stash away their black money in Switzerland.
4) Because of strict rules being followed in banks in Switzerland
5) All the above
2. Which of the following statements is not based on the facts mentioned in the passage?
1) The effect of the new standard would be that the existing secrecy laws would become obsolete.
2) In the new regime, the current system of getting information on request will be replaced by an automatic information exchange based on reciprocal sharing.
3) The new system will help uncover complex trails of money stashed away offshore.
4) The new system will help India bring back the entire amount of `2126.52 lakh crore deposited till 2011.
5) In the current system, information about tax evader could be received only on request.
3. In what way would the new standard be different from the current system?
(A) In the current system there is secrecy law whereas in the new standard information sharing will be allowed.
(B) In the new system there is provision for punishment against banks as well as authorities using secrecy laws to evade governments trying to hunt down black money hoarders.
(C) The new standard aims to prevent wealth flow into financial blackholes.
1) Only (A) and (B) 2) Only (B) and (C)
3) Only (A) and (C) 4) Only (A)
5) All (A), (B) and (C)
4. Find the correct statement on the basis of the given passage.
1) The Finance Ministers of the G-20, including India, have endorsed the draft framework presented by the OECD.
2) According to a 2012 Tax Justice Network report, $21 to $32 trillion is invested almost tax-free in 80 offshore secrecy jurisdictions.
3) India need not frame any new law to make use of the new system as there are already enough strong laws in force against tax evaders.
4) The new standard would not be applicable for past offenders.
5) None of these
5. What is/are the loopholes in the new system?
(A) The new system does not allot any identity regarding the country of residence of the tax evaders.
(B) Top one per cent will get away unless the new standard ensures that the information covers all of the foundation’s participants.
(C) Bank vaults currently allow people to stash away their assets in the form of gold.
1) Only (A) 2) Only (B)
3) Only (A) and (B) 4) Only (B) and (C)
5) All (A), (B) and (C)
Directions (Q. 6-8): Choose the word/group of words which is MOST SIMILAR in meaning to the word/group of words printed in bold as used in the passage.
6. Evade
1) attack 2) steal 3) clear
4) avoid 5) violate
7. Fix
1) stabilise 2) confusion 3) trouble
4) certain 5) position
8. Reciprocal
1) mutual 2) careless 3) rare
4) elegant 5) obscure
Directions (Q. 9-10): Choose the word/group of words which is MOST OPPOSITE in meaning of the word/group of words printed in bold as used in the passage.
9. Endorsed
1) rejected 2) neglected 3) bestowed
4) invested 5) approved
10. Concealed
1) channelised 2) exposed 3) confirmed
4) hided 5) transferred
Answers:
- 2
- 4
- 5
- 1
- 4
- 4
- 3
- 1
- 1
- 2
