The bill proposes to delegate powers to FBR for granting immunity from penalty to the people who declare their undisclosed income. ILLUSTRATION: JAMAL KHURSHID
The Senate Standing Committee on Finance, which met here on Friday with Nasreen Jalil in the chair, rejected the Tax Laws (Amendment Bill) 2012 with the concern that FBR had presented a bill instead of offering an amnesty scheme to 2.7 million elite of the country. The Senate had referred the bill to the committee on December 21 for consideration.
The bill proposes to delegate powers to FBR for granting immunity from penalty to the people who declare their undisclosed income.
“How can we make laws to transfer powers of parliament to FBR,” Senator Ishaq Dar asked and said this was like an NRO to give immunity to the tax dodgers to generate only Rs100 billion.
He claimed that the country could collect a whopping Rs1.4 trillion if only 5% tax was imposed on identified people. “The proposed bill is in a bad shape and even if the National Assembly passes it, it will be challenged in court within 48 hours,” Dar declared and hoped that the court would strike it down.
Senator Humayun Khan Mandokhel commented that the bill was an attempt to give blanket powers to FBR for giving incentives to bring undocumented economy under the tax net. “Some other way should be found,” he suggested.
Mandokhel alleged that FBR was involved in Rs450 billion worth of corruption and its officials were receiving 20% to 25% of total revenue collection as bribe.
Committee Chairperson Nasreen Jalil pointed out that the bill had flaws and it was an attempt to override the National Accountability Bureau (NAB), Federal Investigation Agency (FIA) and the companies’ law.
She said FBR had not given any details of expected revenue collection and the purpose behind proposed amendments to the tax laws.
Senator Haji Adeel said FBR had not played its role and did not serve notices to 2.9 million tax evaders. The committee asked the FBR to replace the bill with an amnesty scheme with a set timeframe.
Defending the bill, FBR Chairman Ali Arshad Hakeem told the committee that only 800,000 people paid tax in 2011 and reliance was increasing on collection of indirect taxes.
“Influential people are getting tax exemptions in 84% tariff lines, which itself is an NRO for the elite,” he said, adding the National Database and Registration Authority (NADRA) had indentified 2.9 million tax evaders after checking details of their bank accounts, travel expenses, credit cards and vehicles.
“We want to give immunity to 2.7 million people and the remaining 200,000 will be dealt with as per existing laws,” he said. Under the amnesty plan, people will enjoy immunity by paying Rs40,000 if they opt for the scheme in first month, Rs50,000 in second month and Rs70,000 in third month.
He said the amnesty was a long-term plan to bring more people under the tax net and collect Rs250 billion in the first year.
Tax exemptions
“Tax exemptions are a criminal offence and we are going to present a plan before the finance minister to eliminate them,” the FBR chief declared.
Talking to the media after the meeting, Hakeem said the International Monetary Fund (IMF) had expressed reservations about tax exemptions to the elite. “IMF wants there should be no tax exemptions, zero rating and distortions in the system,” he said.
“We are going to give a presentation on January 2 to the finance minister on the impact of tax exemptions and zero rating on revenues after their elimination,” he said.
Notices to tax dodgers
Hakeem announced that FBR would start issuing notices to 200,000 top tax evaders from January 1, who also have no National Tax Number (NTN). “We have even pictures of these tax dodgers, who have visited foreign countries and are not paying taxes,” he said.
Published in The Express Tribune, December 29th, 2012.
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FBR hould consider changing name to FBA= Federal Board of Amnesty.seems that all they do
Mr Hakeem has not sent any notices to these tax evaders in the last six months ? I think he is working for these tax dodgers instead of for FBR.
The Senators were right in rejecting the proposed amnesty bills and asking questions. They should ask the Chairman FBR to provide data of how many persons have NTN and how many filed Income Tax returns in 2011 and 2012.And what steps have been taken by FBR about those who have not filed the returns What was the success or failure of the NTN certification scheme and how much money was spent on advertisement They should ask the Chairman how many persons are Sales Tax Registered and how many are "payment filers".
These amnesty schemes would create havoc in tax system of Pakistan for years to come If FBR/NADRA has data use the data.Funny the Chairman FBR does not trust the officers of FBR but does nothing about them. Why should honest tax payer pay tax at 25% when tax evaders pay 1.25% under amnesty scheme.