Finance Minister Ishaq Dar’s go-to policy for broadening the tax net has fast turned into offering amnesty schemes for all those that have managed to evade taxes.
Judging by the success of the past three amnesty schemes offered since PML-N came into power in 2013, this default position must change.
The ruling party fails to see the general climate of international financial laws.
Internationally, there is a move towards greater transparency and accountability and with various conventions under the Organisation of Economic Cooperation and Development (OECD), many countries, including tax havens, will start sharing their information with other countries, making it even harder for individuals to keep undeclared wealth abroad.
If this latest tax amnesty is actually offered in Pakistan, the biggest beneficiaries of this would be those who have chosen to stash money and assets outside the country, and now get tax breaks at home too.
It just gives moneyed interests more choices to whiten their money, rather than forcing them to pay their dues.
The Finance Minister is correct in pointing out that there is a need to set examples for promoting tax compliance in the country, which is exactly why offering the richest and wealthiest tax amnesty schemes is counterproductive.
The government cannot continue to squeeze the middle and lower classes with sales, property and income taxes, while letting the rich off the hook with amnesty schemes.
It is grossly unfair, and a lazy policy to make people accountable.
The audit policy of the Federal Board of Revenue (FBR) is instead a better policy, both for bringing previous non-filers into the tax net and for flushing out all those with unexplained sources of income.
There are other policies too – with increasing electronic banking services, the government has access to the accounts of many non-filers, forcing them to pay up should not too much of a problem.
Tax collection is always a thankless job, and the government is not having an easy time with it, but offering amnesty schemes is not the answer.