Centre has no powers to pass Benami bill: SBP
Central bank also objects to the confiscation of Benami properties by federal govt
The Benami transactions prohibition law may be reconsidered in consultation with the provinces and the Federal Ministry of Law. PHOTO: FILE
ISLAMABAD:
The federal government’s bill on prohibiting Benami transactions is in violation of the constitution, as powers to legislate on property matters rest with the provinces, said the State Bank of Pakistan (SBP) while objecting to the Benami Transactions Prohibition Bill.
In its written response, the central bank also objected to the proposal of confiscation of Benami properties by the federal government, saying it did not have such powers under the 1973 Constitution.
Benami Transactions Bill 2016: What is it worth in Pakistan
The central bank’s response to the bill, which is currently under discussion in parliament, deals a blow to the government’s efforts to get the piece of legislation passed. The National Assembly has already endorsed the bill, which is now being examined by the Senate Standing Committee on Finance.
“As per Article 142 of the Constitution read with entry 37 of the Federal Legislative List and definition of property provided by Article 260 of the Constitution, the power to legislate in respect of property vests in the provinces,” said the central bank.
Therefore, it added, the Benami transactions prohibition law may be reconsidered in consultation with the provinces and the Federal Ministry of Law.
Headed by Senator Saleem Mandviwalla of the Pakistan Peoples Party, the standing committee had sought the SBP’s opinion on the bill. The reply showed that the federal government had ignored the central bank in the consultation process, despite the fact that the SBP had to play a role in the implementation of the law.
The standing committee has already raised half a dozen objections while discussing the bill, notably the clause seeking confiscation of Benami properties and the definition of property. The government has proposed that after enactment of the law, any property, which is declared Benami, will be confiscated.
However, the central bank also objected to this clause. It said the clause needed to be reconsidered because Article 172(1) of the Constitution states, “Any property which has no rightful owner shall, if located in a province, vest in the government of the province, and in every other case, in the federal government.”
Benami bill: will it work?
SBP Governor Ashraf Wathra was present in a meeting of the National Assembly Standing Committee on Finance that approved the bill but he remained silent and did not raise objections, said FBR Chairman Nisar Mohammad Khan, while reacting to the central bank’s objections.
Finance Secretary Dr Waqar Masood suggested that the standing committee should not have taken views of the central bank.
The committee on Thursday completed first reading of the bill. It is expected to delete the clause of confiscation of assets, terming it a very harsh punishment.
Benami assets are those that are not in the owner’s name and are aimed at concealing the real ownership. Benami transactions are one of the sources of circulation and investment of black money.
The government had presented the Benami bill in parliament as part of a commitment to the International Monetary Fund (IMF) in order to curb this practice.
PTI seeks to bring offshore assets in law's ambit
However, the FBR chairman tried to play safe and did not directly mention that the purpose of the bill was to curb tax evasion. “The bill has nothing to do with tax evasion,” he said.
However, the preamble of the proposed bill says the purpose is to curb tax evasion and terrorism financing.
Another serious objection of the central bank pertained to the opening of cases of past Benami transactions for investigation. It said there might be instances where the property owners could have lost the record of transactions or proof of payments. It suggested that there should be some limitation on the opening of past transactions.
The standing committee also objected to the imprisonment clause, terming it too harsh. The original bill empowers the government to confiscate Benami properties and the violators could face imprisonment of up to seven years.
Published in The Express Tribune, November 25th, 2016.
The federal government’s bill on prohibiting Benami transactions is in violation of the constitution, as powers to legislate on property matters rest with the provinces, said the State Bank of Pakistan (SBP) while objecting to the Benami Transactions Prohibition Bill.
In its written response, the central bank also objected to the proposal of confiscation of Benami properties by the federal government, saying it did not have such powers under the 1973 Constitution.
Benami Transactions Bill 2016: What is it worth in Pakistan
The central bank’s response to the bill, which is currently under discussion in parliament, deals a blow to the government’s efforts to get the piece of legislation passed. The National Assembly has already endorsed the bill, which is now being examined by the Senate Standing Committee on Finance.
“As per Article 142 of the Constitution read with entry 37 of the Federal Legislative List and definition of property provided by Article 260 of the Constitution, the power to legislate in respect of property vests in the provinces,” said the central bank.
Therefore, it added, the Benami transactions prohibition law may be reconsidered in consultation with the provinces and the Federal Ministry of Law.
Headed by Senator Saleem Mandviwalla of the Pakistan Peoples Party, the standing committee had sought the SBP’s opinion on the bill. The reply showed that the federal government had ignored the central bank in the consultation process, despite the fact that the SBP had to play a role in the implementation of the law.
The standing committee has already raised half a dozen objections while discussing the bill, notably the clause seeking confiscation of Benami properties and the definition of property. The government has proposed that after enactment of the law, any property, which is declared Benami, will be confiscated.
However, the central bank also objected to this clause. It said the clause needed to be reconsidered because Article 172(1) of the Constitution states, “Any property which has no rightful owner shall, if located in a province, vest in the government of the province, and in every other case, in the federal government.”
Benami bill: will it work?
SBP Governor Ashraf Wathra was present in a meeting of the National Assembly Standing Committee on Finance that approved the bill but he remained silent and did not raise objections, said FBR Chairman Nisar Mohammad Khan, while reacting to the central bank’s objections.
Finance Secretary Dr Waqar Masood suggested that the standing committee should not have taken views of the central bank.
The committee on Thursday completed first reading of the bill. It is expected to delete the clause of confiscation of assets, terming it a very harsh punishment.
Benami assets are those that are not in the owner’s name and are aimed at concealing the real ownership. Benami transactions are one of the sources of circulation and investment of black money.
The government had presented the Benami bill in parliament as part of a commitment to the International Monetary Fund (IMF) in order to curb this practice.
PTI seeks to bring offshore assets in law's ambit
However, the FBR chairman tried to play safe and did not directly mention that the purpose of the bill was to curb tax evasion. “The bill has nothing to do with tax evasion,” he said.
However, the preamble of the proposed bill says the purpose is to curb tax evasion and terrorism financing.
Another serious objection of the central bank pertained to the opening of cases of past Benami transactions for investigation. It said there might be instances where the property owners could have lost the record of transactions or proof of payments. It suggested that there should be some limitation on the opening of past transactions.
The standing committee also objected to the imprisonment clause, terming it too harsh. The original bill empowers the government to confiscate Benami properties and the violators could face imprisonment of up to seven years.
Published in The Express Tribune, November 25th, 2016.