Say No To Amnesty Schemes
Another Amnesty is here, offering relief to the holders of overseas assets to announce their properties abroad, and to bring foreign exchange back to the country, by paying a nominal amount of tax.
Habitual of repeating what Einstein called madness (doing the same thing over and over again and expecting a different result), we are once again going to collect the legal tax from illegal money.
Inspired mainly with the idea of broadening the tax base and addressing the challenges on the external and fiscal fronts, such schemes are a fundamental violation of the basic right of the honest tax payers who are being charged at higher rates of taxes just because of their honesty and voluntary compliance.
Government will have some income in the form of taxes and the foreign investment may rise but it’s only a short term relief with severe consequences in the longer term.
Short term or yearly targets can be achieved by increasing the tax rates or implementing short term indirect taxes, but the achievement of long term targets need long term thinking.
Tax base should be increased instead of tax rates and size of economy should be increased. Investment in purpose-based long-term activities to create an asset base which guarantees sustained economic development.
Government need surplus for re-investment so as to increase the volume of the economy but the fiscal deficit is not allowing the government to have spare money.
Despite favorable business environment, decrease in power crisis, and improvement in law and order situation, growth in the economy is still below par.
FBR revenues increased considerably during the past few years but still the increment is far behind the required rate. GDP growth should be sustainable and somewhere between 7-8 percent for next few years.
An equitable tax system providing economic justice is the essence of sustainable growth. Instead of widening the tax base and adding more to the filers list; tax rates are increased resulting in increased burden on the existing tax payers. Tax base should be increased and economic growth should be sustainable.
Such schemes to declare assets by paying a nominal amount in taxes are destined to fail due to the inherent element of dishonesty associated with them. Such schemes were never successful is past.
Despite successive schemes, the informal and illicit economy increased manifolds, flawed tax system, increased rates, lack of documentation, incompetent enforcement mechanism and easy evasion of taxes have promoted the culture of non-compliance and transfer to income from legitimate to illegitimate economy.
Such amnesties provide an opportunity for the big businessmen to legalize their ill-gotten wealth.
A future hope of such schemes encourages the users to evade taxes today and get their wealth legalized tomorrow.
This has paralyzed the whole system. Such loopholes should be closed and trust should be developed in the legitimacy and transparency of system.
Confidence of tax payers need to be improved and a system of accountability and reward should be promoted. All the back doors channels should be closed and any hope for such schemes in future should be brought to an end.
Reforms should be introduced wherein all tax evaders are treated with an iron hand. A criminal is a criminal, no matter how big or small he is.
Strong political will is required to take coercive measures against the tax evaders.
Only the tax machinery could not be blamed, only FBR could not do much as long as the government is in a compromising mood and reluctant to take action against the non-filers.
Take measures to enhance sustainable collection at the one end and ensure transparent spending at the other.