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No more tax amnesty schemes

Tariq Khalique

Like in the past, the present government of Pakistan Tehrik-e-Insaaf is once again facilitating the rich and elites by offering another amnesty scheme to whiten their money.

A media report, quoting sources in the Federal Board of Revenue, said the government is offering money whitening scheme for foreign and domestic undeclared assets on the same pattern, which was introduced by the previous government last year.

The dilemma is that there is no uniformity in laws to govern the country. The rules and regulations vary from one segment of the society to the other. The rich and the elite get relief, while the poor and the middle-class have to face the brunt of all the harsh measures taken by the government, on one pretext or the other.

 

 

 

 

Let’s take the recent statement of Finance Minister Asad Umar, who announced another amnesty scheme to whiten money. The government is anticipating that this tax amnesty would play a major role in economic growth, considering the ongoing fiscal situation.

Why governments always think about giving relief to the rich and never provided any reprieve to the poor? Why there are no policies to lessen the burden of the downtrodden citizens of the country? Maybe, because leaders of all the political parties belonged to the same strata, and keeping this in view, they devise policies for their own benefit.

Before coming into power, PTI had always criticised the amnesty schemes, but on the contrary, when it comes to their benefit, they took full advantage of such schemes. PTI Chairman and now the Prime Minister of Pakistan, Imran Khan, himself is a beneficiary of such an amnesty scheme introduced in 2000 by the then president Pervez Musharraf. According to reports, Imran Khan bought a flat in London in 1983/84 through an offshore company, Niazi Services Ltd, and declared it to the Pakistan authorities only after the amnesty scheme was introduced almost after 18 years.

Whenever we approach the end of the financial year, tax authorities start reminding individuals and businesses of the deadline to pay their taxes, but no significant result was ever achieved.

This is an era where governments across the world have started exchange of banking and financial information of high net worth individuals to ensure transparency in tax matters, and avoiding taxes has become increasingly difficult.

But in Pakistan, the governments believe tax amnesty schemes to be an efficient way to recover unpaid taxes; however, it is a measure that flares up corrupt practices, because big businesses and elites, as usual, find it easy to whiten their black money or get waived their loans taken from banks and other financial institutions. Such policies brought the country under more economic stress.

Tax Reforms Commission in its report had termed such amnesty schemes one of the major factors, causing distortions in the tax system.

 

 

 

 

In a democratic system, provision of economic justice remains the most important objective of taxation. It not only relates to equal distribution of tax burden, but taxing the rich for providing benefit to the poor is at the core of social democracy; however, in our country, all these elements are missing.

Successive governments have used taxation as a tool to generate more revenues by putting pressure on the already burdened taxpayers so that they continue to enjoy comforts and luxuries.

Financial managers never consider abolishment of innumerable tax exemptions available to big businesses and mighty individuals to create a balance between the lives of the rich and the poor.

The present rulers should learn from the past experiences that all these amnesty schemes not only discourage development of a real tax culture in the country, but also can never provide any long-term benefit to the ill-fated economy.

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2 comments

  1. Nice thoughts. Very well written, as well.