Tuesday April 16, 2024

Economic slump due to COVID-19: Top businessmen demand general tax amnesty

By Mehtab Haider
April 12, 2020

ISLAMABAD: Top businessmen have floated an idea to the country's top political leadership for granting another tax amnesty scheme so that people having substantial wealth must come forward for utilizing money without the fear of FBR.

“Yes, some quarters of the businessmen have proposed to the government for granting another general tax amnesty scheme and unveil its plan for incentives when the lockdown in the country is over after controlling COVID-19,” senior government officials confirmed to The News here on Saturday.

The official said that the proposal of tax amnesty has come under discussion in recent days as some of the top business quarters suggested to the government that extraordinary situation required extraordinary response. The business activities have almost come to a halt as the food related products were largely out of tax net except few selected items but transactions have almost stopped making impossible for the tax machinery to collect desired taxes. Without such a stimulus package the economic activities will not kick-start even after ending of lockdown, the businessmen argued. “One top business giant even proposed to the government to stop collecting taxes for next six months,” said another senior officer of the finance ministry who also added that there is no end to the wish list of the business tycoons as they are always busy vying before the government to increase their incentives and subsidies. However, one FBR official wondered that how could the government would satisfy IMF and FATF for a general tax amnesty scheme because they were currently discussing PM's incentive package with the two international institutions against clear understanding that the IMF and World Bank are opposed to any such schemes in principle.

So far Pakistan had announced around 11 tax amnesty schemes since 1958 and most of the schemes had failed to yield any positive results. However the last two schemes one was announced during the PML (N) led regime in 2017-18 and second one under PTI led government last fiscal in 2018-19 had fetched around Rs 200 billion collectively. The amnesty introduced at the twilight of the PML-N led regime in 2017-18 had received total 82,889 declarations with paid up tax amount of Rs124.8 billion that demonstrated that each of the declaration on an average paid tax amount of around Rs1.4 million into the national kitty.

The amnesty announced by the PTI had attracted more declarations than the PML (N) but on average per declaration paid up tax amount declined to Rs1 million. The last amnesty scheme introduced in the PML-N led regime in 2018 had fetched Rs124.8 billion in taxes for whitening of Rs2.5 trillion black assets and income. Out of total Rs124.8 billion, the FBR had collected Rs90 billion in June 2018 while the remaining amount of about Rs35 billion was collected in July 2018. The government had received total 82,889 declarations in tax amnesty scheme in 2017-18 for whitening of Rs2,500 billion out of which foreign assets having worth of Rs1,040 billion and domestic assets of Rs1460 billion were made part of the formal economy of the country. Out of total 82,889 declarations, the FBR received 5,929 foreign and 76,960 domestic declarations. The last amnesty scheme had fetched $436 million foreign currency.

In the last tax amnesty scheme, the FBR had collected Rs 85 to 90 billion in 2018-19 as well as in July 2019 because the date of amnesty was extended till the first few days of the current fiscal year.