CREATIVE COMMONS
The government, after receiving yet another drubbing from traders, again extended the amnesty scheme for 15 days. The number of traders availing the scheme barely crossed the 5,000 mark, even after an extension granted by Dar on February 29.
The traders legalised Rs51 billion of black money. “The new date for availing the scheme has now been set at March 31,” said Dar. Moreover, the government also gave a six-day extension in filing income tax returns by all individuals and companies after the overall number of filers dropped to 925,000; about 120,000 less than the previous year.
As for the withholding tax (WHT) rate, the government decided to keep the rate unchanged at 0.4% instead of increasing it to 0.6%, indicating a lack of political will to go after non-filers who are considered ‘traditional voters’ by the ruling party.
Only 3,205 traders pay tax under amnesty scheme
“It is a matter of just 15 days, eventually the rate has to be brought back to the original 0.6%,” said Special Assistant to the Prime Minister Haroon Akhtar Khan. “At lower rates, the FBR has so far collected Rs14.5 billion from non-filers.”
The government did not have legal cover to keep the rate of withholding tax rate at 0.4% and Dar, while using his discretionary powers as the Chairman of the Economic Coordination Committee (ECC) of the Cabinet, gave the anticipatory approval for retaining the lower rate.
Dar pre-empted the ECC decision. “As of March 15, about 5,250 traders filed income tax returns and paid Rs510 million in taxes,” said Khan. Dar, however, had vowed to bring in one million people in the net.
Khan said that these 5,250 people got over Rs51 billion black working capital legalised by paying 1% of the amount in taxes. Till Tuesday evening, about 3,650 traders had filed the income tax returns using the online system.
The remaining persons filed the returns manually. In the current fiscal year’s budget, the government levied 0.6% tax on all banking transactions above Rs50,000 carried out by non-filers, which was later on reduced to 0.3%. From March 1st, the rate was increased to 0.4% while the date for filing the returns was extended for another 15 days.
This is the second time that the amnesty scheme has failed. Earlier, the government offered the same scheme to industrialists for attracting investment but it too ended in disappointment. “The results are very discouraging and the traders now must not complain if authorities start a crackdown against them for not filing the returns”, said Ashfaq Tola - a chartered accountant and member of the Tax Reforms Commission. The purpose of amnesty scheme was to bring 2.8 million traders into the tax net.
However, sources in the FBR told The Express Tribune that most of the known wealthy traders got registered in the names of their kin, which entirely defeated the purpose of the scheme. Calling notice Meanwhile, the PPP submitted a ‘Calling Attention Notice’ in the National Assembly Secretariat. The PPP members, Dr Nafisa Shah, Dr Azra Fazal Pechuho, Syed Naveed Qamar, Beelam Hasnain, and Mir Aijaz Hussain Jakhrani submitted the notice.
“We would like to invite the attention of the finance minister towards a matter of urgent public importance on the failure of the ‘Voluntary Tax Compliance Scheme 2016’ to encourage traders to file returns”, read the notice. The legislators demanded an explanation for the scheme’s failure and said it was a matter of grave concern and therefore must be discussed on the floor of the house under ‘Rule 88 of Rules and Procedures’ of the National Assembly.
Published in The Express Tribune, March 16th, 2016.
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