PTI Amnesty Scheme: Was It Successful?

Politics

The interim final results regarding the Asset Declaration Scheme for 2019 was formally announced by the government.

This Asset Declaration Scheme ended on 3 July rather than the original day of 30 June 2019, as endorsed by the parliament.

On the extension day, it was announced that an ordinance issued by the president would supply the legal cover for the additional days. However, this ordinance is still awaited.

The prime minister expressed his willingness for the extension of the deadline on national television. This came as a surprise to his economic managers. The IMF (International Monetary Fund) publicly opposed the extension.

The IMF, as stated by its representative in Pakistan, is critical of tax amnesties.

Its experience, across countries, revealed that in general tax amnesties go together with huge costs, like undermining the sense of fairness & morale of taxpayers. This results in neutralizing prospective short-term gains.

After this, a new turn followed. Shabbar Zaidi, the FBR (Federal Board of Revenue) chief announced that in theory, no extension occurred.

He explained that the deadline’s last day actually fell on a public holiday. This resulted in the deadline been taken to the following working day. The day which followed after that, which was 1 July, was a bank holiday. So, the factual deadline date was 2 July.

However, the deadline was extended to 3 July up till the day’s closing hours. This was done to facilitate the people who already were standing in the queue, whilst the completion process was halted by the system.

Obviously, the closure of the scheme was adjusted in a way that it ended formally before the beginning of office hours in Washington DC on Wednesday – 3 July.

At this stage, the IMF’s executive board was due to make a decision to the approval of $6 billion to Pakistan regarding the bailout program of 39 months.

In total 137,000 citizens took advantage of the scheme. This offers Rs70-billion which is approximately $432-million, in revenue, whilst whitening the value of Rs3-trillion of undeclared assets.

A year ago the scheme launched by the PML-N, collected a little more than Rs124-billion, which amounts to approximately $1.05-million, whilst 83,000 new taxpayers were brought into the revenue system, whitening the value of approximately Rs2.5-trillions of unrevealed assets.

The extended deadline came just one day after Mr. Zaidi announced in a statement that there will not be an extension.

After he was reminded, he stated that they were not granting an extension, but were assisting the citizens who already were in the queues, in order for the process to be completed.

The above-mentioned number of people & the amounts of money regarding revenue & whitening was confirmed by Dr. Abdul Hafeez Shaikh, the Finance & Revenue adviser.

However, no details of declared assets both national and international nor the tax break down was revealed.

Until now it is still unclear which amount of collected funds will be going towards the accounts of the current fiscal year which ends on 30 June 2019, as well as the upcoming fiscal year.

The scheme of the PML-N government, as mentioned above, faced two significant deterrents. Firstly, this scheme got stuck for more than a month before the top court in the country, which affected its momentum.

Secondly, the obvious prime minister-designate, Imran Khan, was threatening prospective beneficiaries to abstain from the scheme and that those who take advantage of it as well as the facilitators would go to jail.

The ordinary citizens preferred to abstain from the scheme due to the general perception that abstaining is a better option to stay out of jail as well as out of the revenue net.

During the previous year, Imran Khan said that they first steal the money and afterward, is introducing tax amnesty schemes.

He added that these types of schemes are created for benefitting the corrupt and that just corrupt elements, ultimately become the beneficiaries.

Imran Khan said that such schemes are created to fool honest citizens and encourage the corrupt elements to both plunder & amass wealth, which will be whitewashed later on.

However, after ten months in office, he approved a similar kind of scheme, whilst he made a minimum of five dedicated speeches to the nation in which he urged citizens to take advantage of the offered opportunity.

Dr. Miftah Ismail, the finance minister of the former PML-N stated that as numbers speak for themselves, there is no need for him to claim some credit.

He added that the PTI’s scheme was quite similar to his government’s scheme, which is not the scheme which Asad Umar was justifying on the basis that foreign liquid resources would be returned to Pakistan.

He added that according to his opinion the PML-N’s scheme had more success due to the fact that almost double the tax was generated by it when compared to the recent scheme.

However, he stated that the recent scheme’s full breakdown and full details are not yet accessible to enable him to be fair in his comments.

The fact that those who declared their assets now is more than during 2018, should be analyzed.

When the question was asked to Dr. Shaikh, why the Pakistani amnesty schemes consistently offered a limited timeframe which gives the perception that it is just meant to benefit the ruling elite, he did not respond.

Approximately 220,000 return filers were added by the two schemes combined, whilst Rs5.5-trillion net-worth of assets came into the revenue system, generating approximately Rs194-billion ($1.48-billion) in tax.

However, in comparison with the Indonesian scheme which Pakistan copied, it is insignificant. The Indonesian scheme brought 900,00 citizens into the revenue system and $360-billion net-worth of assets into the formal economy.

The recent scheme again proved that consecutive governments are favoring tax evaders over the law-abiding taxpayers.

As from the early 1960s, eleven amnesty schemes were introduced by consecutive governments, whilst it excluded special-purpose items such as the legalization of vehicles on which customs duty was not paid.

Although a lot of countries, which include those located within the developed world such as the United States, Belgium, Australia, Germany, Canada, Indonesia, Greece, Malaysia, Italy, Russia, Portugal, Spain & South Africa, have offered equivalent limited timeframe proposals, avenues like that were never used again.

Leave a Reply

Your email address will not be published. Required fields are marked *