Yet another amnesty scheme is announced. Do not expect any miracles in it, but at the same time, do not take it too casually as confiscation of Benami accounts, in compliance to FATF, under new law could be a reality. It is the second scheme in as many years. One of the reason for relatively low success of the previous scheme was its poor timings.
But the timings of this scheme are not best either. The issue last time was election year and now, with no such consideration, having mere six weeks of the scheme is too little. Day before yesterday, the news was that the scheme would be applicable till December in three phases - lower rates for earlier declaration.
However, actually, the duration is till 30th June. It's not much time as we all know about the productivity level of people in Ramadan - three weeks after Eid would be the effective time to work with lawyers/consultants to declare assets. The government is supposedly here for another four years then why is the rush? It's IMF; as the Fund would never approve such schemes which discourage the honest tax payer as it is unfair with honest tax payer to let evaders come in net for peanuts.
The Fund would probably have mentioned that there would be no such scheme while Pakistan is in the IMF programme, and the signing off is expected in the start of July. Had the scheme been in effect till December, the chances of its success could have been higher. Longer tenure scheme offered in Indonesia in 2016-17 was deemed successful, as in 9 months time, around $10 billion were repatriated and much bigger amount was declared.
The problem in Pakistan is that the PTI government popularity has nosedived in the past nine months, and the trust surplus that Imran created after his first speech as PM is evaporating. The confidence of businesses on the government is important for any asset declaration scheme to be a success. Imran is running out of options, the economic team is changed and in a small window before the IMF, the scheme is offered.
Had the scheme been offered in first three months of power, its success chances would have been higher. Well, we have to live in today's reality. The one benefit this scheme would have is fear of confiscation of Benami accounts after the conclusion. Since FATF compliance is going to be a reality, people should take it seriously. However, in case of Benami immovable assets, tax consultants are of the view, that there could be legal repercussion in case of confiscation.
The rates offered in the scheme are low as compared to what Asad was thinking. The objective touted is to document the economy and to broaden the tax net, immediate tax revenues collection is not the consideration. However, seeing, the dismal performance of FBR in ten months of this year, the last six weeks could salvage some revenues from the scheme.
The market participants are welcoming this scheme, and have comfort of Shabbar, coming from their side of isle, but those members were all sold on Miftah and Abbasi scheme as well. It may not be revolutionary or a game changer, it surely is a step in the right direction.
Comments
Comments are closed.