After months of deliberation and a volley of arguments thrown back and forth between the government and the traders’ community, the Tax Amnesty Bill was tabled in parliament for discussion on Friday. While the government should be lauded for its attempt to widen the tax base, whether this bill will actually increase the number of taxpayers, by two million at that, as claimed by the government, is questionable. The biggest beneficiaries of this bill, will of course be the traders; the ones that kept the value of their assets hidden in order to avoid tax, and those that have reason to hide what they are trading to avoid legal troubles. Traders that utilize this scheme can declare assets worth Rs 50 million, pay a nominal 1% tax on that amount in the first year, with this rate increasingly negligibly in the next three years and will not have to get their books audited for the next four years.

Although in principle, it does indeed seem like the perfect opportunity for traders to turn their black money into legal assets, a similar scheme for industrialists proposed by the same government in 2013 failed to draw in as many taxpayers as was hoped. So how is this move likely to produce different results? Put simply, this move is the government’s way of asking nicely. It does little to stress the importance of paying taxes or ensuring that individuals are paying taxes, or if they are, are doing so in full. The old loopholes still remain; traders can always transfer assets to the names of loved ones or friends in order to understate their incomes, can even refuse to pay taxes under this new scheme because the government still has no mechanism in place to find hidden assets or black money and with the added benefit of being allowed to keep their books closed against prying eyes, can conduct more illegal business with impunity.

Many in the trading community were of the opinion that the upper limit for assets declared should have been Rs 100 million, a demand to which the government had originally acquiesced, but had to reject after strong opposition by the IMF. However, even with the Rs 50 million limit in place, this bill provides tax exemptions to the rich and to the trading community, both an integral part of the PML-N voter base. With this bill, the government has tried to get as many stakeholders off its back by doing as little as possible; the IMF, by bringing about a Tax Bill, the trading community, by providing them amnesty and if passed, the general populace by claiming that this will increase the number of taxpayers in the country. Of course, whether any of the above will be happy with this move is debatable.