Amnesty for cheats: PM gives approval to FBR’s tax registration scheme

Three bills related to the tax amnesty scheme to now be clubbed into one.


Shahbaz Rana November 13, 2012

ISLAMABAD:


Prime Minister Raja Pervez Ashraf has approved the government’s new carrot-and-stick tax policy, aimed at broadening the extremely narrow tax base, while expressing regret that delays in netting the roughly three million tax cheats reflects poorly on the government’s performance.


According to reports, the premier gave his nod to the Tax Registration Enforcement Initiative Scheme in a meeting held here on Monday at the Prime Minister House. The government has also decided to club the three separate bills dealing with tax registration, asset declaration and awards for whistleblowers into a single bill that is to be introduced in parliament, finance ministry officials said.

Federal Minister for Religious Affairs Syed Khursheed Shah, who is also chief whip of the Pakistan Peoples Party in the National Assembly, had advised tax officials that three separate bills would not only take extra time in convincing allied parties, but also create unnecessary hassles.

After a green signal from the premier, the bill will now be introduced to the cabinet before it is presented to the National Assembly, which is currently in session. Tax officials are running against the clock: the government is to complete its five-year constitutional term early next year, and general elections could be called any time.

The Federal Board of Revenue (FBR) had chalked out the scheme to encourage over three million identified persons to enter the tax net by paying nominal taxes upfront. These persons have also been asked to declare hidden assets by paying 1% of such assets’ value as tax.

After introduction of the scheme, identified persons will have to either pay a nominal tax or recourse to an appeal. In the appeal, they will have to prove that they are not liable to pay any taxes to the government. The FBR will be bound to give its decision on the appeal within seven days. Those who will not pay taxes or file an appeal will have their computerised national identity cards (CNIC) suspended immediately. An FBR official added that all privileges a CNIC holder enjoys will be immediately withdrawn.

In an effort to break the unholy alliance of tax dodgers and corrupt FBR officials, the government has decided that the tax and the returns be filed in designated centres of the National Database and Registration Authority (NADRA).

“The demand for cars, luxury goods and housing reflects the availability of wealth in the country… unfortunately, the [size of the] tax base is not commensurate to this phenomenon,” Prime Minister Ashraf observed in the meeting, according to an official statement.

The premier also observed that a large segment of Pakistan’s economy is informal, depriving the national exchequer of its due share and acting as a hindrance for economic planning and development. “The menace of capital flight to tax havens has deprived the country of its true potential for development and progress,” he added.

According to the FBR, out of a country of roughly 180 million, only 758,368 Pakistanis file their income taxes. The figure is exclusive of those who file returns but do not pay any tax. Even by adding them to the total, the figure barely reaches 1.02 million persons.

According to an official, the premier said that had this scheme been introduced two years ago, the government’s performance would have been much better today due to the availability of additional resources.

Officials also said the premier has cautioned tax authorities against inquiring about past dealings of those who avail the facility.

While giving his own endorsement, Finance Minister Dr Abdul Hafeez Shaikh warned that the scheme could fail due to enforcement constraints.

However, the FBR has assured authorities that they have concrete information against all identified tax dodgers, and any safe passage available to evaders will be blocked by handing over registration responsibilities to NADRA.

Published in The Express Tribune, November 13th, 2012.

COMMENTS (8)

Tahir kham | 11 years ago | Reply

Many people want to pay the taxes, but the collection system is made so difficult, that people resort to corrupt tax collectors for settlement thru bribery.

Shahid Butt | 11 years ago | Reply

@meekal a ahmed: You are right. No body wants to pay taxes especially rich class.tax money is like abiood flow in the body. No govt can survive with out taking taxes from the people.Mr Hakeem is dreaming that he can collect the money this way.Till the time rich people's are not forced to pay taxes, they will not.Lot of people do not pay Zakat which is 2.5%, how they are going to pay these taxes. You have to have threat to their assets and accounts, if you want taxes to be paid.

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