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Boost for tax evaders

January 06, 2013

THE controversial bill seeking to change laws to provide an opportunity to tax dodgers to legalise their wealth has finally reached the National Assembly. Over the next few days, the tax amnesty bill could be passed into law. Those who think that opposition to the bill by the PML-Q, the MQM and the PML-N will block its passage are mistaken. After all, which political party does not have people in its fold waiting to take advantage of the tax concessions that the bill offers? And why are the government and the Federal Board of Revenue pushing the bill so earnestly when economists and tax bar associations have opposed the scheme? Both the finance minister and the FBR chairman insist that the amnesty will bring around 3.2 million untaxed rich people into the tax net, raising the number of taxpayers to four million from the existing 800,000 — which would still be a minuscule per cent of the population. The FBR contends that it is in possession of a “wealth” of data on the lavish expenditure of those who are being offered amnesty. If what the FBR is claiming is true, then the board has a very weak case for the amnesty scheme. It should have initiated ruthless action against those who do not pay their taxes instead of facilitating them in legalising their wealth.

The approval of the amnesty by the NA will not send a positive signal to honest taxpayers. It will only discourage them and provide an incentive for them to resort to illegal means in the hope of getting a similar deal a few years down the road. Nor will the exclusion of politicians and bureaucrats and their families from the scheme, as proposed by the FBR chief, help remove popular doubts about the hidden intentions of those who are pushing for it. The FBR must understand that the argument that it lacks enough powers to initiate legal action against tax dodgers and evaders doesn’t hold water. It has sufficient powers to punish cheaters. But FBR action against such people is not possible without political backing, and the government will not change its stance with polls round the corner.