Of tax records and amnesties

The PTI government has been trying to be in control of the economy for nearly a year. In its efforts to improve the state finances, the government is striving to deal sternly with tax evaders. Part of a nationwide effort to bring all citizens under the tax net, the PTI offered an amnesty scheme set to expire on June 30. Indeed, the ruling party is demonstrating responsibility as best as it can. In a televised address just days before the expiry of the June 30 deadline, Prime Minister Imran Khan asked the citizens – for a third time since the launch of the scheme – to declare their wealth and help the government bring back the ailing economy to health.

We recognise the government effort in pursuit of its target of generating revenue such as an online database with the FBR and NADRA for citizens to ascertain their declared wealth. However, there are some steps that beg a bit of criticism. For example, real estate property is receiving a large amnesty, taxable at just 4%, when it is no secret that a handsome figure in taxes could be collected otherwise. Besides, a reporting threshold of Rs500,000 for banks is overwhelming as a starting point. It may have been easier to begin collecting account information about citizens with larger accounts as a test to analyse the results of the new amnesty scheme, before moving in on smaller consumers. While there exists a grave need for the government to acquire consumer information from banks – an obvious solution all along – there is limited guidance for groups of people who are not technologically inclined.

Some medicines might seem bitter, but to cure a serious illness, they are necessary. While the previous such schemes were devoid of any motivational warnings, like the threat of action over non-declaration of hidden assets, the one offered by the incumbent government does carry the stick of jail sentence as well as assets seizure, along with the carrot of incentives. That is why, the ruling party has a point when it insists what it has offered is an asset declaration scheme, which should not be criticised as an amnesty to tax dodgers.

Published in The Express Tribune, June 24^th, 2019.

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