Tax amnesty scheme
Prime Minister Shahid Khaqan Abbasi announced tax amnesty scheme based on five points according to which people earning Rs. O.1 million per month will be exempt. Those earning Rs. 1.2 million to 2.4 million will have to pay 5 percent tax from their salaries. Moreover, 10 percent tax will be levied on those earning Rs.2.4 million to Rs 4.8 million annually while those earning more than Rs 4.8 million will be liable to pay 15 percent income tax. Overseas Pakistanis after a penalty payment of 2 percent will become eligible to benefit from tax amnesty scheme. Those going for tax amnesty will be exempted from tax net.
The tax amnesty package was not well received by and large because of its liberal concessionary component for offshore accounts and assets holders. It does offer huge tax exemptions to the salaried class. The standing committee on finance resolved to block the government’s move in the national assembly. Pakistan Tehrik Insaf also castigated the proposed amnesty scheme and revealed to challenge it on every platform .Criticizing the PML-N leadership, PTI MNA said that all those who chanted the slogan of the sanctity of the ballot don’t want to give parliament its status now. He said that the real motive behind introducing the scheme via bypassing the parliament is to clear the way for looted money to be brought back to the country. He cautioned the government from rolling out any scheme without parliament consultation. The law maker termed the tax amnesty scheme an attempt to whiten the black money of money launderer and vowed that his party will strongly resist it in the parliament. He said it will be challenged in the court.
Any amnesty scheme for offshore assets is good if it successfully repatriates cash back into the national exchequer that would otherwise stay parked outside. A sum of $ 100 is an attractive addition. But can it be done? Experience has not shown that it can. Pakistan has seen mixed outcomes from tax amnesties. In 1958, under Field Marshall Ayub Khan, the first tax amnesty scheme brought 71,289 wealthy people in the tax net. The new taxpayers declared 1.3 billion rupees in assets. In 1969, General Yahya Khan amnesty added 19600 tax payers with declared assets of Rs. 920 million. In 2016, Zulfiqar Ali Bhutto could collect Rs. 270 million through tax amnesty. In 1986, General Muhammad Ziaul Haq attempted amnesty but that met with little or no success. In 1997, the then Prime Minister Nawaz Sharif could add only Rs. 141 million. In 2000, General Musharaff launched a vigorous campaign for the documentation of the economy which was a right step but it fall prey to the rigidity of tax machinery. Nevertheless, it resulted in collection of $ 3 billion. In 2016, PML-N government announced three tax amnesties with the expectations to bring millions of tax. But in actual terms 128 people participated.
The timeline of tax amnesty shows that in the eras of Ayub Khan and Musharraf, the tax amnesty schemes produced positive results. On the country in all oligarchic civilian governments such schemes turned out to be a farce enabling the black money holders to regularize their ill gotten wealth and immovable assets. The Supreme Court of Pakistan has constituted a committee of experts to trace and bring back money stashed in banks and properties by citizens abroad. Because of its weak ant-money laundering law, Pakistan is facing challenges at the Financial Action Task Force. This intergovernmental organization has given it a short leash until 30th June to improve its anti-money laundering and counter terror financing laws failing which the country will be put back on the grey list. Any offshore amnesty scheme would be viewed with suspicion and would further weaken the country case as being a responsible state in the comity of nations. It may be construed as exeption from the anti-money laundering law. There seems no rationale as to why the incumbent government at the tail end of its tenure is bent upon giving a certificate of legitimacy to the illegal offshore accounts and assets holders. The safe passage provided to the money launderers is an offshore business NRO.