Taxing the rich — maybe

Published: February 10, 2018
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The ink is not yet dry on the proposal to use the CNIC as the vehicle to piggy-back any number of improbably enforceable tax reforms. Now Minister of State for Finance Rana Muhammad Afzal has announced that the Standing Committee on Law and Justice has decided to set the bloodhounds on the trail of the many billions of dollars placed offshore by Pakistanis in a bid, so far entirely successful, to prevent their money being taxed. To this end the government has begun negotiations with the UAE and the Swiss government in order to collect information in the hope that they will share it regarding the wealth of at least 500 extremely rich people.

The Swiss are implacable in their resistance to sharing the time of day never mind details of those that use their banking system, and the UAE is unlikely to be any chattier. Both are members of the Organisation of Economic Cooperation and Development (OECD) under the charter of which there is an obligation to share information regarding the assets and properties of Pakistani nationals held by them. It is reported that the process of exchange begun among the OECD states on January 1st 2018.

Even if there was an exchange of information it is going to be exceedingly difficult for the revenue collectors to get their hands on any of it. By definition the monies they pursue are ‘offshore’ and the owners of said monies are going to have made sure that their affairs are in order and their use of offshore entities is within the law. Further, it cannot be assumed that the offshore monies were gained illegally and it may well be the product of legitimate business and legally deposited. It is preposterous to imagine that tax-avoiders are going to show up at the doors of the Revenue Department carrying wads of cash. This whimsical scheme will quietly disappear and a lot of rich people will quietly chuckle all the way to the (offshore) bank.

Published in The Express Tribune, February 10th, 2018.

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