Assets declaration, PM’s public service message

In a video of public service message aired on electronic media and reported by the print media, Prime Minister Imran Khan has made passionate appeal to Benami assets and bank accounts holders to declare their hidden wealth before 30th June and avail this last opportunity of tax amnesty. He warned the non-filers and tax evaders that the present government has all the relevant data about the concealed assets and accounts and the law will come into action if these assets are not declared for levying tax thereon before the expiry of deadline set for this purpose.

Tax amnesty schemes in the have not achieved the intended results and the present one may also not succeed although the independent economists have objected to the very low tax rate that shall be charged on the disclosed Benami assets and accounts. They believe that the nominal tax rate on declared assets will further strengthen the culture of amassing black money to be declared later for availing the windfall gains under tax amnesty scheme. It will further swell the size of parallel ecomomy.

A famous saying goes: Rod is the logic for fools. To implement the tax vision of the Prime Minister, a proposal for the introduction of punitive legal regime to root out the non-filling of tax return culture that emerged in the previous PPP government and got well entrenched in the five years tenure of PML-N government. From 2001 to 2007 the number of active taxpayers had gone up to 2.4 million but went down below .2 million. The PTI government intends to increase this number to 4 million. The practice of charging non-filers with higher tax rate, which was introduced by the previous government, did not work. Likewise, the recipe of bank transaction tax encouraged cash transaction in big sales and purchases. Keeping in view the failure of this practice, PTI led government wants to immediately start legal proceedings against the people who carry out big cash and bank transactions but their names are not on the Active Taxpayers List. At present less than 1.5 million people are on taxpayers list maintained by the Federal board of Revenue. The FBR has proposed to insert 10th schedule in the Income Tax Ordinance of 2001 which will envisage the required legal component.

The tax exemption policy of the previous government accentuated the pace of revenue shortfall. In the outgoing fiscal year alone a loss of Rs. 977 billion has been witnessed, which is higher by 80 percent or Rs. 431 billion than the previous year. The tax exemption took a heavy tool on the economy in the shape of mounting budget deficit but this bitter fact has never been published in the earlier documents of Economic Survey of Pakistan. This time it has been reflected in 20018-19 edition of Economic Survey of Pakistan.

Plugging the revenue loopholes, withdrawal of tax exemptions and additional tax levying of Rs. 700 billion will benefit the economy only when the colossal waste of Rs.1100 billion that losses incurring public sector entities devour every year is not stopped by the privitisation of all state enterprises. The Advisor on Finance Dr. Abdul Hafeez Sheikh yesterday branded these state enteritis “push and pull white elephants.”But neither the previous fond of privitisation government nor the incumbent one showed sagacity to offload this back breaking financial burden. Interestingly, the same financial wizard brokered a deal with UAE Etesalt Telecom Company for the sale of less 50 percent shares and transfer of management of Pakistan Telecommunication Limited in President Musharraf government but could not realise the full amount of sale proceeds. An amount of $ 800 million is still outstanding. Will the present government initiate efforts for its retrieval? Moreover, is there any proposal for the documentation of informal sector on the anvil?