IN announcing a tax amnesty at the tail end of its term, the PML-N government is walking in the footsteps of its predecessor. If matters proceed in accordance with the ruling party’s plans, it will be the fourth amnesty scheme launched by the government since it came to power. Out of all these, only one has yielded any appreciable results. This was the real estate amnesty of December 2016, although even in that case, the volume of funds — just under Rs300bn — declared under it, was dwarfed by the sheer quantity of black money that was invested in property over the decades. If there is one thing that the history of amnesty schemes teaches us, it is that they do not work, except to make honest taxpayers feel like fools for following the law as they are supposed to do. It is a bit of a puzzle, therefore, as to why the government has sought repeated recourse to amnesty schemes, even when it was under an IMF programme and committed to broadening the tax base.

This time as well, the rhetoric accompanying the announcement of the scheme was about broadening the tax base in the country, an exercise that has seen little success over the years. The prime minister chose the occasion of his appearance at the Pakistan Economic Forum, hosted by a grouping of the country’s largest business and industrial concerns that are in the formal sector and that file their returns every year, to make the announcement. At the event, a piece of advice offered to the prime minister was to follow the example of Indonesia, which, it was stated, had realised around $30bn from an amnesty scheme. Such suggestions are not helpful as the history of Pakistan’s own amnesty schemes leaves little room for optimism. For decades now, successive governments here have been avoiding the difficult question of tax reform within the country; most recently, the PML-N government completely abandoned the idea of value-added tax. Instead, we see growing recourse to gimmickry such as a bank transaction tax or amnesties. With the latest announcement, the PML-N has sadly sealed its legacy as yet another helpless government bowing to the galaxy of vested interests that prefer to ply their trade beyond the reach of the state which protects their racket, and gives them a home.

Published in Dawn, January 19th, 2018