The reports of the Prime Minister mulling over an extension for the government’s amnesty scheme are worrying and imply that the government is reluctant to admit mistakes and hence will not implement course corrections even when it is obvious one is needed. Official numbers for the amount of people that brought forward undeclared assets have not been released, nor has any value of assets brought into the tax net been announced, but there are whispers of a paltry sum recovered so far, meaning that as expected, the amnesty scheme has failed to deliver what the government had hoped for.
The Prime Minister’s announcement of considering an extension also came as a surprise as it seemed that this decision was made unilaterally, even when the International Monetary Fund has publicly stated that any extension would be a bad idea and would go against Pakistan’s case with the board at the international lending body. The Federal Board of Revenue stands on the same page; pragmatism from the tax collectors has led to a widespread belief that the government’s hopes of a windfall of asset declarations and taxes gathered as a result is misguided.
The unsurprising and inevitable failure of the amnesty scheme is not going to be rectified by extending the deadline. The problem with the amnesty scheme is not the time-frame – it is the scheme itself. The limited efficacy in cases around the world and the obvious marginal returns expected as a result of repeating this policy soon after an identical one preceded it just last year were all points raised against the idea, but the government went ahead with the plan anyway.
This leads one to naturally question who is making key decisions regarding the economy. Is it the Prime Minister, or is the Financial Advisor and the new economic team set up by the government – none of which have come out in favour of an extension – really in charge? Or is it the IMF?Considering that the government heavily modeled this year’s budget on the IMF stipulations, does its stance on the subject not merit some more attention from those in power? Confusion and contradictions surround economic policy-making in the country, and if the PTI government does not get a handle on the situation soon, the damage wrought to the economy in the past ten months might be irreversible.
