BY nullifying an amnesty scheme initiated by the last government granting duty and tax concessions for smuggled vehicles, the Islamabad High Court has sent the right message. As Justice Shoukat Aziz Siddiqui noted, the FBR’s amnesty discriminated against citizens who lawfully purchase vehicles and pay their requisite state dues. By declaring such amnesties and schemes, the state seems to imply that it is okay to dodge taxes and the formal economy as long as one pays a lower cost at a later date. Similar schemes have been announced in the past, for example the amnesty declared last year under which no questions would be asked regarding the source of funds invested in the Karachi Stock Exchange. These schemes appear to encourage illegality in the financial sphere, by promising to turn ‘black’ money into ‘white’. Those who honestly pay their taxes are given the impression that it doesn’t pay to follow the rules and that there are ways to break the law and still work the system. Considering the fact that Pakistan’s tax-to-GDP ratio is abysmal, such amnesties only encourage the rampant culture of tax evasion. And while efforts are being made to document the informal economy, which is almost as big as the formal one, official moves that encourage smuggling and illegal imports make no sense. Simply put, such moves are not sustainable as they work only to strengthen the status quo, where tax dodging is tolerated, and offer very short-term advantages to the state.

Apart from questions of financial ethics and loss to the exchequer, the local automobile industry is also affected and jobs are lost when vehicles are smuggled and later legalised. As for the FBR’s claims that billions of rupees were collected when over 50,000 vehicles were regularised under the amnesty, it would be fair to ask how much revenue the state could have collected had the vehicles been imported legally. The court’s decision should prompt the tax authorities to avoid coming up with such dubious schemes in the future.


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Comments (15) Closed




Ijaz
Jun 21, 2013 11:56am

Really worrying symptoms, if editorials in papers like DAWN succumb to such thoughts, instead of looking at the larger picture. Please DAWN don't devalue your name to the extent of "Selling". :(

Ijaz
Jun 21, 2013 12:27pm

Really worrying symptoms, if editorials in papers like DAWN succumb to such thoughts, instead of looking at the larger picture. Please DAWN don't devalue your name to the extent of "Selling". :(

Guest63
Jun 21, 2013 03:05pm

Its heartening to read that the Superior Judiciary is focusing on and Issuing Judgement to set the Wrong Steps aside . Issuing a verdict is one thing and then getting it implemented is another ( how long it took the Govt to implement the NRO based order ! ) . Commenting upon the Superior Judiciary and its Rule of law activism , Sen FB ( the presidential spoke man ) on thr floor of the house said few days ago " The Judiciary seems to consider itself above the Parliament !" that statement shows the mind set of the ruling elite i.e do what ever you can , get the step rubber stamped by the so called parliament and when caught in your un lawful act , then shout within the house immunity any thing you want and still get away with it ( any thing said in the house has immunity ! ) . In my humble opinion , giving ruling alone will not solve this problem , the judgment must also carry the maximum time period allowed to carry out the order else there will be this / that adverse act on the wrognful l propagators of the original act " no matter even if they were parliamentarian , hopuse speaker , PM , or even the president , what is un law full act . Must Not have any immunity from the prosecution , perhaps only then the rule of law and live by the constitution , will start to work , in our most un law full national moral

Aziz
Jun 21, 2013 03:19pm

Fully agree that the Court took the right decision based on right reasons. Crime should not be rewarded or condoned.

Syed Ahmed
Jun 21, 2013 07:54pm

For a change a good decision, partly delivered. The smugglers of such vehicles be severely punished along with the beneficiaries if you want to stop the bad practice.

Ak
Jun 21, 2013 08:14pm

Good move. The penalty for dodging duties and taxes should be higher, not lower, than what the actual tax would have been. These amnesties promote illegal activity and are usually promoted by one group or another who gains from them. If people know breaking the law will cost more in the long run and they can go to jail and loose assets they will think twice before doing so.

NK Ali
Jun 22, 2013 09:01am

The extent of tax evasion is truly immeasurable and reprehensible. The lack of application ands attention to law and justice is evident everywhere. Take for example, the small shopkeepers, offices, and shops in downtown Karachi in the precincts of M A Jinnah Road, Kharadar, Jodia Bazar, Nanakwara, Lea Market, and the adjoining areas. Are they taxed? The taxman does not have the guts to go there and apply the law. Also, look at the kundas hanging outside the buildings The small general stores, milk and bakery shops, clothing and apparel, tailor shops, motor and welding garages, furniture, property dealers, construction enterprises, eateries on food streets, of course, they do know what is Zakat/Sadaqah but do not have any intention of registering themselves for payment of taxes. The tax evasion is taken by these few sectors for granted, as a birthright. Only a predetermined, calculated, and strictly applied law will prevail in stages. For that, you have to have educated and well-paid employees in the FBR that keep away from fraternizing and 'bonhomie.' Otherwise, the day is lost for the Pakistan economy. Salams

Ameeds
Jun 22, 2013 02:08pm

Taken together the piece of IMF and this one, I would say that this is one step in the right direction.

All these special tax regimes should be abolished. Sooner the better!

shantanu
Jun 22, 2013 02:37pm

How does one bring the vehicle in pak and subsequently not paying any tax for it . Wish we had a system like that in India too

asif
Jun 22, 2013 06:18pm

what a foolish editiorial. whether the legalization of smuggled vehicles was right or wrong is a mute point now, the supreme court should have acted before the amnesty was granted. the people who paid the duties under the scheme are innocent at this point, they paid them to the government under a legal process and they have been cheated out of their money now. you cannot make a law retroactive if the previous law was legally binding at the time. pakistan's supreme court is corrupt, incompetent and thuggish, it doesn't have any respect for the law itself.

shahzad
Jun 23, 2013 12:55am

Islam Abad High Court Justice Shoukat Aziz Siddiqui was having Schizophrenia when only one bench of High Court directed the government to null and void the Amnesty scheme, A British Liberal Writer was right when he said' 'it is yield to the temptation to oppress, rob or murder, it is not mere commission of these crime, but it is the symptom of spiritual death, and the assertion that when committed for the British Monarch. The Nordic Race or the Catholic church these are not crimes but virtues.

shahzad
Jun 23, 2013 01:02am

@Ijaz: correct

Ijaz
Jun 23, 2013 12:06pm

@Aziz: Bro just tell me one thing, will this ruling somehow stop this smuggling and illegal vehicle phenomenon eradicate from Pakistan (do look at the history and our socio-political attitudes). Or for that matter could it have vanished all those vehicles from Pakistan and replace them with all the legal ones? Let the society grow and come to understand what is "wrong" and detrimental to Pakistan, such rulings will only delay this understanding. What needs to be done politically must be done politically, judiciary has its own sphere of influence where it can and should focus more. Try to differentiate between individual and collective aspect of human life. Similarly they have different institutions to bring progress to social, moral political etc aspects of life. Judicial institution has more application to impact collective life through individual aspects of life, not the other way.

FarmerDr
Jun 23, 2013 10:11pm

"Awaiting for moderation" is incorrect and very irritating English. The correct phrase is either "Waiting for moderation" or "Awaiting moderation" please remove this error. Thank you.

Anon
Jun 24, 2013 06:47am

@FarmerDr: Everybody runnnn.... The grammar nazi is here.