When the tax amnesty scheme was introduced in April 2018, it was met with a mixed response, with most criticising the fact that it was introduced right at the end of the Prime Minister’s tenure. Tax amnesties for the past few years have not proved to be successful, due to a variety of reasons, and this scheme, adopted at the last minute by a leaving government, seemed poised to fail too. One month later, results show that the critics may have been right, but not all is as simple as it seems.

The results show that few hundred people filed returns under the one-time tax amnesty scheme until June 8, 2018, contributing a sum of nearly Rs350 million to the national exchequer since the scheme’s inception two months ago. This result is disappointing compared to the target set by the government while introducing the scheme, as tax amnesty schemes, even unsuccessful, generate at least a billion rupees.

Before we condemn amnesty schemes to the gallows, it should be noted that there were many other factors that could have affected this poor performance. The final outcome of the amnesty scheme was still resting in the Supreme Court of Pakistan, a factor that could have definitely discouraged people from taking benefit of the scheme both inside and outside of Pakistan. One of the most important ingredients of a successful amnesty scheme is trust in the credibility of the scheme, and this trust would have been comprised by a pending SC case.

Another reason for the failure of the scheme perhaps was also that the Federal Board of Revenue (FBR) was not involved in creating the scheme and the so-called economic package including amnesty scheme was drafted and finalised in the prime minister secretariat. This may have lead to a lack of response from the tax machinery, and thus this amnesty scheme was not taken seriously, by the tax authorities, or the people.

Indeed, officials in the tax machinery are now arguing that the scheme needs to go on for a longer period of time to show results. Officials believe that now that the FBR has become active, and has devised a media campaign to target elite people in the country as well as abroad to lure them, the scheme will start showing more favourable results.

However, this has been tried and tested and failed in the past. Until a penalty of non-disclosure after the amnesty is established, no outcome of these schemes are expected.