PM’s tax amnesty scheme fails to attract people

Less than 250 people have so far opted for the scheme by paying around Rs450m

ISLAMABAD: Less than 250 Pakistanis have so far availed the tax amnesty scheme and paid a paltry sum of about Rs450 million in taxes despite personal appeal by Prime Minister Imran Khan through his televised address.

The dismal outcome in the past over one month has compelled the Federal Board of Revenue (FBR) to keep the figures away from parliamentarians and the federal cabinet.

The cabinet and the National Assembly Standing Committee on Finance separately took up the progress on PM Imran’s black assets legalising scheme.

The FBR promised to share details with the federal cabinet next week.

Sources in the FBR told The Express Tribune that results were extremely poor and people did not respond to the personal appeal made by the premier and the campaign launched by the FBR. They said around 250 people paid about Rs450 million to the exchequer.

However, Minister of State for Revenue Hammad Azhar told The Express Tribune that he was hopeful the scheme would start getting good response from next week as he was receiving encouraging feedback from tax bars and Regional Tax Offices.

Businessmen divided on new amnesty scheme

The asset legalising scheme would expire on June 30. FBR Chairman Shabbar Zaidi categorically told the National Assembly Standing Committee on Finance on Tuesday that the scheme would not be extended beyond June 30 due to the start of the International Monetary Fund (IMF) bailout programme from July.

When contacted, FBR spokesman Dr Hamid Atiq Sarwar refused to divulge outcome of the tax amnesty scheme, saying the figures had been kept confidential. But he did not give reason for keeping the results secret.

There is no legal bar to keep the outcome secret, although the FBR cannot disclose the names of beneficiaries.

On May 13, the Pakistan Tehreek-e-Insaf (PTI) government launched the tax amnesty scheme in an effort to encourage people to declare their hidden assets at extremely low tax rates from 1.5% to 4%. Yet, the people have not responded to the call.

The prime minister has twice gone on state media to appeal to the people to avail the tax amnesty scheme aimed at avoiding harsh action by the FBR from July.

The federal cabinet also discussed the tax amnesty scheme on Tuesday but its deliberations remained focused only on how to make it attractive for people, according to a federal minister.

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It was decided that a marathon campaign would be launched to create awareness among people of the importance of the amnesty scheme.

The FBR will also make data of banking transactions available on its website to encourage people to legalise these assets.

The previous tax amnesty scheme, launched by the Pakistan Muslim League-Nawaz (PML-N) government, remained largely successful when over 84,000 people legalised around Rs2.4 trillion in black assets by paying Rs124 billion in taxes.

“Generally, people tend to opt for the tax amnesty scheme in the last week,” said Zaidi, while responding to a question raised by a member of the NA standing committee.

Zaidi said the FBR had not fixed any tax collection target in the budget from the amnesty scheme. He refused to disclose results of the amnesty scheme despite being repeatedly asked by members of the committee.

However, the budget documents showed that the FBR expected total revenue of Rs4.150 trillion in the outgoing fiscal year, which was only possible if it collected at least Rs200 billion from the tax amnesty scheme. In first 11 months of FY19, the FBR collected only Rs3.31 trillion and it would need Rs850 billion in June, which was impossible.

In its internal meetings, Rs150 billion worth of revenues from the amnesty scheme came under discussion before the launch of the scheme, according to sources in the FBR.

Zaidi told the standing committee that the purpose of the scheme was to provide a transit period to those who held Benami assets. He said if the Benami asset holders did not avail the scheme, the FBR had powers to confiscate their assets and put them behind bars for seven years.

“At present, businessmen are weighing whether they should opt for the tax amnesty scheme or not,” Zaidi told the standing committee.

If people were not responding to the scheme, it meant the prime minister’s appeals had not made an impact on them, said PPP’s Dr Nafisa Shah, a member of the standing committee.

“It will take time to change the 70-year-old culture and I cannot guarantee whether everyone will be in the tax system from July,” said Zaidi while responding to a question raised by a standing committee member.

PML-N’s Sheikh Qaiser said the FBR chairman’s decision on not disclosing the provisional tax amnesty results indicated that the scheme had failed.

Published in The Express Tribune, June 19^th, 2019.

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