Restraining move: Senators oppose giving FBR access to bank accounts
Believe step will trigger capital flight, encourage corruption.
Independent senator Hamayun Mandokhel claimed that FBR officials would harass account holders if given the power to do so. DESIGN: KIRAN SHAHID
ISLAMABAD:
Politicians from both the treasury and the opposition benches have baulked at a government proposal to allow the Federal Board of Revenue (FBR) access to bank accounts of customers, fearing it will spark capital flight and leave people at the mercy of corrupt tax officials.
Members of the Senate Standing Committee on Finance and Revenue, which met here on Monday, said they would not support any move that would permit the FBR to infringe on banking secrecy and provide it online access to bank accounts. Headed by Senator Nasreen Jalil of the MQM, the Senate committee unanimously proposed that the government should withdraw the budget measure.
The committee is in the process of firming up recommendations of the senators on behalf of the Senate. These recommendations will be placed in the National Assembly for inclusion in next year’s budget. However, Senate recommendations are not binding on the NA as far as the Finance Bill is concerned.
“Access to bank accounts will be disastrous and will encourage corrupt FBR officials to blackmail account holders,” said Jalil.
Senator Talha Mahmood of JUI-F, which is allied to the ruling PML-N, said the move would trigger capital flight and have similar implications as the previous PML-N government’s decision to freeze foreign currency accounts after the 1998 nuclear tests.
Independent senator Hamayun Mandokhel also criticised the proposal and claimed that FBR officials would harass account holders if given the power to do so.
Through proposed amendments to banking laws, banks have been asked in the recent budget to provide online access to their central database, which contain the details of account holders, transactions made in their accounts and a list containing particulars of deposits totalling Rs1 million or more during the preceding calendar year.
The proposal says banks will also provide a list of payments made by any person against bills aggregating Rs100,000 or more during the preceding month in respect of a credit card issued to that person.
Furthermore, it will be mandatory for the banks to send a copy of each currency transaction report and suspicious transaction report generated and submitted by it to the Financial Monitoring Unit under the Anti-Money Laundering Act, 2010.
The FBR is of the view that access to bank accounts will help it catch tax dodgers.
“Access to accounts will be used discretely by the FBR and field formations will not have access to these accounts,” said Ansar Javed, chairman of the FBR, clarified.
“When the FBR makes a profile of tax evaders, it wants to give a chance to the account holders to voluntarily pay their taxes,” he said while providing the rationale behind the plan.
Javed said it had been proposed that bank accounts be linked to the National Data Warehouse at the FBR headquarters, making all information available at one place for ensuring tax compliance.
To address growing concerns, the FBR chairman will give a presentation today (Tuesday) to the standing committee.
While the FBR insists that it wants to rely on bank data for improving tax collection, the past three years have seen all such attempts fail despite its tall claims of holding information of over three million tax dodgers, including details of their bank accounts.
The standing committee also unanimously proposed to increase the income tax rate for banks by 10%, arguing that banks were making large profits on the trillions of rupees worth of investments they have made in government treasury papers.
However, the FBR chairman dismissed the proposal and stressed that small banks were actually suffering large losses. If the tax rate was increased, the banks would pass it on to in the shape of higher interest rates, he argued.
Published in The Express Tribune, June 18th, 2013.
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Politicians from both the treasury and the opposition benches have baulked at a government proposal to allow the Federal Board of Revenue (FBR) access to bank accounts of customers, fearing it will spark capital flight and leave people at the mercy of corrupt tax officials.
Members of the Senate Standing Committee on Finance and Revenue, which met here on Monday, said they would not support any move that would permit the FBR to infringe on banking secrecy and provide it online access to bank accounts. Headed by Senator Nasreen Jalil of the MQM, the Senate committee unanimously proposed that the government should withdraw the budget measure.
The committee is in the process of firming up recommendations of the senators on behalf of the Senate. These recommendations will be placed in the National Assembly for inclusion in next year’s budget. However, Senate recommendations are not binding on the NA as far as the Finance Bill is concerned.
“Access to bank accounts will be disastrous and will encourage corrupt FBR officials to blackmail account holders,” said Jalil.
Senator Talha Mahmood of JUI-F, which is allied to the ruling PML-N, said the move would trigger capital flight and have similar implications as the previous PML-N government’s decision to freeze foreign currency accounts after the 1998 nuclear tests.
Independent senator Hamayun Mandokhel also criticised the proposal and claimed that FBR officials would harass account holders if given the power to do so.
Through proposed amendments to banking laws, banks have been asked in the recent budget to provide online access to their central database, which contain the details of account holders, transactions made in their accounts and a list containing particulars of deposits totalling Rs1 million or more during the preceding calendar year.
The proposal says banks will also provide a list of payments made by any person against bills aggregating Rs100,000 or more during the preceding month in respect of a credit card issued to that person.
Furthermore, it will be mandatory for the banks to send a copy of each currency transaction report and suspicious transaction report generated and submitted by it to the Financial Monitoring Unit under the Anti-Money Laundering Act, 2010.
The FBR is of the view that access to bank accounts will help it catch tax dodgers.
“Access to accounts will be used discretely by the FBR and field formations will not have access to these accounts,” said Ansar Javed, chairman of the FBR, clarified.
“When the FBR makes a profile of tax evaders, it wants to give a chance to the account holders to voluntarily pay their taxes,” he said while providing the rationale behind the plan.
Javed said it had been proposed that bank accounts be linked to the National Data Warehouse at the FBR headquarters, making all information available at one place for ensuring tax compliance.
To address growing concerns, the FBR chairman will give a presentation today (Tuesday) to the standing committee.
While the FBR insists that it wants to rely on bank data for improving tax collection, the past three years have seen all such attempts fail despite its tall claims of holding information of over three million tax dodgers, including details of their bank accounts.
The standing committee also unanimously proposed to increase the income tax rate for banks by 10%, arguing that banks were making large profits on the trillions of rupees worth of investments they have made in government treasury papers.
However, the FBR chairman dismissed the proposal and stressed that small banks were actually suffering large losses. If the tax rate was increased, the banks would pass it on to in the shape of higher interest rates, he argued.
Published in The Express Tribune, June 18th, 2013.
Like Business on Facebook to stay informed and join in the conversation.