KARACHI, Sept 22: The tax amnesty scheme expected to be launched by the Federal Board of Revenue next month has drawn a lot of criticism from tax experts and consultants who feel that it will not only be a futile exercise but may also send the wrong message to an honest taxpayer.
Experts pointed out that all amnesty schemes announced by the FBR so far did not only fail miserably to produce the required results but also have encouraged delinquent taxpayers and non-taxpayers to amass black money.
The FBR is expected to launch a “Tax Registration and Investment Scheme-2012” next month under which undisclosed assets would be legalised on payment of less than one per cent tax.
“If Rs10 million are legalised then only Rs100,000, at one per cent, will go towards tax, which means the national exchequer would lose billion of rupees towards the collection of “just tax”, observed Asim Rizwani, a tax consultant.
This compared with a tax collection of Rs2.5 million on holding Rs10 million under a normal tax regime.
He further said that such amnesty schemes demoralise honest taxpayers and provide impetus to tax dodgers and evaders who lately have been growing at a faster pace as the size of the black economy has swelled to over 60 per cent of the registered economy.
Tax expert Syed Rizwan Shoaib said that such schemes were against the fundamental rights enshrined in Section 25 of the Constitution. He said that if the government was serious to strengthen and broaden the registered and organised sector then it had many ways to do so.
The last five amnesty schemes announced by the FBR, including one in which army was also used, all failed to produce results, therefore, there should remain no illusion about the forthcoming scheme, he added.
Above all, he said the past tax amnesty schemes to some extent were only availed by registered taxpayers to legalize those parts of their ill-gotten wealth and undisclosed assets which they had concealed from tax authorities over the years.
He said in the era of information technology (IT) it is easy to net tax dodger and evaders provided the tax hounds are serious to go after them.
Shoaib said all necessary information can be collected about each and every individual if FBR adopts a proper method for enhancing tax net and registered economy.
He said that NADRA, prior to issuance of CNIC, provides a form which seeks information about the profession of an individual and currently there are around 80 to 90 million registered persons with NADRA which means that all the basic information of these individuals is available.
Similarly, he said that Pakistan Revenue Automation Ltd (PRAL) also has data of around 0.5 million businesses, industry, importers/ exporters etc and this could also be used to catch tax dodgers and evaders.
In short, he said there are unlimited secure and firm sources to catch tax evaders without announcing such tax amnesty schemes which have failed to produce results. Every fact could be verified by collecting and using information through IT which also includes data from utility companies like KESC, WAPDA, SSGC, SNGC, from land developers such as DHA, KDA, banks and State Bank of Pakistan.