If you have been identified as a tax evader, you can wipe the slate clean by paying Rs40,000 for income or assets up to Rs5,000,000.
The government insists this gives 3.8 million tax evaders a last chance to return to the tax net by paying the relatively small amount.
The scheme comes in the shape of a bill changing the tax laws. It was almost binned because of opposition from two key political parties, the Pakistan Muslim League-N (PML-N) and Muttahida Qaumi Movement (MQM).
But then, according to sources, they softened their stance to appease urban voters, who are expected to be the main beneficiaries. The sources added that the Federation of Pakistan Chambers and Industries persuaded the MQM leadership to let the plan go through.
Thus on Tuesday, the National Assembly Standing Committee on Finance and Revenue unanimously approved the changes. The bill will now be put to the lower house of Parliament for approval before the president signs it into law.
Under the scheme, tax evaders will be asked to pay the Rs40,000 or file an appeal within three months. The beneficiaries will have to file returns for four subsequent years. If hidden income or the asset’s value overshoots the five-million-rupee threshold, the evader will have to pay an additional 1% to 1.75%.
If the identified tax evaders do not use the scheme, their Computerised National Identify Cards will be suspended for commercial transactions. Their bank accounts will be blocked and they will be barred from international travel.
It came down to a choice between catching the identified people in two years or bringing them in the tax net in two months and making pay from here onwards, argued Federal Board of Revenue Chairman Ali Arshad Hakeem. According to him, all citizens with tax liabilities, barring the 300,000 serious tax evaders, are eligible. Holders of public office as defined in National Accountability Bureau Ordinance have been excluded from the list of beneficiaries.
When the scheme was originally introduced in the standing committee, leader of the opposition, Senator Ishaq Dar, of the PML-N had vehemently opposed it, saying that the government should not usurp the right of the next Parliament.
The MQM’s Khawaja Mansoor also said his party had reservations and refused to chair the meeting of the standing committee that he headed. But then, the PPP’s Aftab Shaban Mirani proposed that the plan should be passed unanimously. This suggestion was then endorsed by PML-N MNAs Shahid Khaqan Abbasi and Shireen Arshad Khan. Abbasi told The Express Tribune that his party wanted the tax base to be broadened, which was why the plan was supported.
Published in The Express Tribune, March 6th, 2013.