Benami Act enforcement
At last the federal government notified the rules which make operational Benami Transactions Prohibition Act 2017. The Act was passed in January 2017 and the President had given his stamp of approval in February that year. However, the corruption scandals tainted politicians, bureaucrats and influential business tycoons managed to delay its application for two years on flimsy grounds. Operationalisation of the Benami Act is a significant step towards establishing the fundamental of transparency which is sin qua non of strong and functional democracy.
With the enforcement of this Act the federal tax authorities can now exercise the powers to confiscate all those properties which have been held in the names other than the original owners. Such properties are believed to have been purchased with black money or the wealth accumulated by tax evasion. The tax authorities will have the powers to confiscate both moveable and immovable assets. The Federal Bureau of Revenue (FBR) has already gathered the data about Rs. 50 billion held in Benami accounts. From henceforth notices shall be issued within a week to such accounts’ holders and in case of no reply the money deposited in these accounts shall be confiscated. The rules of the Act also provides for rewards to the whistle blowers revealing information about Benami immovable assets up to five percent of the assets value determined on prevailing market prices as defined in the Income Tax Ordinance 2001. The authorities have claimed to have retrieved Rs. 534 million from foreign accounts. The crackdown on Hundi and Hawala transactions and incentives offered to Pakistani workers abroad home remittances have shown 12 percent increase in the past eight months.
As a worth appreciation measure the FBR has moved a summary to the Prime Minister to initiate proceedings afresh against a dozen of senior taxmen on the charges of corruption and inefficiency which include nine officers from Inland Revenue Service and Custom Group. The summary has been moved after the vacation of court’s stay order which these officers had earlier obtained. There were reports that corrupt tax collectors have also acquired Benami properties.
In a related development the finance minister Asad Umer has corroborated the findings of the World Bank Report objecting to the unnecessary layers of secrecy that hide the beneficial owners in the stock exchange business and inherent flaws in the ownership and management structure of public sector enterprises (PSEs). There is dire need of making legislation and codification of comprehensive laws thereon to ensure transparency in these entities as well.
Few days ago in the award distribution function to honestly paying taxes businessmen the Prime Minister had rightly said that 1.7 million taxpayers cannot lift the burden of 220 million people. However, the number of active taxpayers can be increased with a successful campaign of documentation of the economy. It were the corrupt practices and coercive tactics of the tax collectors that the survey launched for the documentation of the economy had to abandoned midstream in the year 2000. In consultation with trade bodies small traders can be persuaded to register themselves for filing tax returns. Moreover, agriculture income has a great potential of buoyancy for direct tax revenue generation and it should no longer enjoy exemption on one pretext or the other. All the loopholes that lower the amount of revenue from direct taxes should be plugged.