Reset on tax regime

The cabinet itself has deferred the matter of the tax amnesty scheme twice and is unlikely to take it up anytime soon

It seems that after all of Asad Umar’s huff and puff on first cracking down on tax defaulters and then succumbing to ground realities to offer amnesty for evaders, the government has undergone a hard reset on its tax regime. Incoming finance czar Dr Hafeez Shaikh, who is in the saddle for a second time, has immediately set about his work, summoning a high-level meeting of the top taxmen in the country and reorienting their priorities. His first briefing appeared to leave him less than impressed with the tax amnesty scheme introduced by his predecessor, noting that any scheme by a new government should be different from the one offered by the previous government in its last year, not merely an enhanced version of the previous regime.

Shaikh called for simplifying the amnesty regime by limiting it to two categories, down from six. Effectively, this would mean that unlike Umar’s plan to have benami properties disclosed by paying the highest tax, owners of such properties will be able to legalise it at lower rates and without much trouble. It is clear that for a government which built its edifice of credibility and public appeal on the basis of transparency and on calling for accountability of the rich, devising systems for such credibility is proving to be a real challenge.

The cabinet itself has deferred the matter of the tax amnesty scheme twice and is unlikely to take it up again anytime soon. Shaikh too seems more interested in completing budget documents rather than to focus on the amnesty scheme. The main idea Umar had was that such a scheme would help boost the country’s coffers. But the scheme was less than enthusiastically received and now it seems to have met its end. It remains to be seen whether this will be the beginning of the end of the lofty dreams that the PTI government had shown the public about transparency and accountability.

Published in The Express Tribune, April 23^rd, 2019.

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