Preparations are afoot to introduce an amnesty scheme that will supposedly net the national exchequer Rs 150 billion, with the cabinet having approved the necessary amendments in the law needed to grant it. However, with the scheme now moving to implementation, it has already run into opposition. This has been made manifest in a letter by the director of the local Transparency International to the Chief Justice of Pakistan asking for suo motu action to be taken. According to the letter, the revenue collection involves the whitening of Rs 7,500 billion in black money. The letter says that this is an over optimistic estimate, as a similar scheme in 2008 only generated Rs 1.54 billion, while whitening Rs 77 billion. An aspect that needs serious consideration is to what extent the scheme will do what it says, and brings into the tax net those who are outside it. Also is to be considered is whether the amnesty might be used to protect the proceeds of crime, allowing criminals to keep their loot. Such wealth can only be obtained from either corruption or drugs. The federal tax authorities must make sure that this amnesty is not misused for money laundering. This amnesty would probably only be availed by retired crooks, with those still active probably assured by the repetition of this amnesty, that there will be more in future.

It also deserves serious consideration that such ‘whitening’ schemes are frowned upon worldwide, because such money is supposedly used to fund terrorist activity. Any government carrying out such a scheme would itself be subject to scrutiny. That is not wanted by a government which wants the approval of the power waging the so-called war on terror. There is also the danger that the amnesty might disguise the real problem with the Federal Board of Revenue, which is the corruption among taxation officials. Instead of tackling this problem, the government might get over-excited by the prospects raised by the amnesty. It cannot escape notice that the cabinet which approved the amendments needed for the amnesty has not approved any measures for general tax reform, or for reforming the taxation authorities.

The conclusion that the federal government is part of the problem, not the solution, comes as the State Bank’s Monetary Policy Information Compendium October 2012 shows that present government has doubled the government’s debt to Rs 14,561 million by its borrowing from the private sector. Instead of anxiety about amnesties whose yields would be dubious, the government would better concentrate on reining in those regal expenditures which have led it into the debt trap.