A needless boast

Federal Finance Minister Ishaq Dar has vowed to bring back the 200 billion dollars banked in Switzerland by Pakistanis. This announcement is unfortunate as it raises expectations which, if not delivered, would fuel discontent. One would have hoped that the Finance Minister had quietly worked towards achievement of this goal and any announcement should have post-dated his success in this regard. Jumping the gun is reminiscent of commitments made by senior party leader Shahbaz Sharif prior to the elections 2013 that, if elected, the party would end loadshedding within six months with Nawaz Sharif claiming that while ending loadshedding would take years yet within one year an appreciable reduction in loadshedding would be witnessed. The PML-N has been unable to deliver on these outlandish and poorly-thought-out commitments leaving the party's credibility at stake. However, while pre-election promises had the objective of winning elections, albeit under false pretenses, yet one would have hoped that the party leadership would exhibit greater responsibility when in power.
Dar's statement no doubt was focused on State Bank Foreign Exchange Manual 2002, which stipulates that "Pakistan nationals resident in Pakistan are not permitted to open or maintain any foreign currency accounts with banks etc, outside Pakistan. As an exception, they can maintain foreign currency accounts abroad in any country other than Afghanistan, Bangladesh, India and Israel provided the balances held in such accounts do not exceed US $1000 or equivalent thereof in other currencies as provided in Government Notification No SRO 1016(1) 79 dated the 17th October, 1979. These accounts cannot, however, be operated from Pakistan without the prior approval of the State Bank". It is highly unlikely that the Swiss would agree to repatriating the entire amount of 200 billion dollars reportedly held by Pakistani residents as it presupposes that the Pakistan government has sufficient clout to compel Swiss banks to repatriate income - clout considerably more than exhibited by key global players for example the United States and the European Union who focused on ensuring that their own nationals paid their taxes on their global income.
To convince the Swiss authorities Dar can argue that Pakistan's tax code on the basis of global income should be honoured by Swiss banks and due taxes on the interest paid for the money held in their banks must be repatriated to Pakistan's treasury. Or in other words, the taxes payable on interest earned on money held in Swiss banks can be repatriated and not the entire amount held in Swiss banks. Critics would, of course, cite the considerable holdings by Nawaz Sharif's sons in foreign countries where they are resident and Dar's own recent announcement that he had extended 50 crore rupees as qarz-e-hasna to his son - a loan that is non-taxable and based on income he earned while a non-resident Pakistani. It is therefore necessary to point out that non-resident Pakistanis, whether dual national or otherwise, do not fall into this category and are not liable to pay tax on their incomes in Pakistan. It is, of course, unclear as to how much of the 200 billion dollars is held by resident Pakistanis as opposed to non-resident Pakistanis.
Failure to deliver on this commitment would generate intense criticism and no doubt lead to accusations that failure was implicit given the party's own leadership banking abroad. One only hopes that realism instead of political posturing becomes the mainstay of our cabinet members.