Since November 1990, when Nawaz Sharif became Prime Minister of Pakistan for the first time, the culture of loot, plunder, corruption, tax evasion and money laundering has been legalised and promoted through an obnoxious law namely, Protection of Economic Reforms Act, 1992 giving a free hand to criminals that no question would be asked by tax officials and functionaries of Federal Investigative Agency (FIA) for acquiring and using dirty money. His three stints as Prime Minister and years as minister and chief minister in Punjab can safely be labelled as "rule of a trader" whose heart is infested with the insatiable greed of amassing wealth, expanding a mediocre family-owned business into a flourishing empire at the expense of the national exchequer, other business houses and the public at large. This fact was also noted by a judge of High Court in a reported case, details of which are summarised below.
In Messrs Pak Ocean and Others v Government of Pakistan through Secretary, Ministry of Finance, Central Secretariat, Islamabad and others 2002 PTD 2850, the petitioners challenged the imposition of regulatory duty on re-meltable iron scrap, excluding bundled and shredded scrap and the reduction in the rate of duty on bundled and shredded scrap as unlawful, arbitrary, unreasonable and ultra vires Articles 4, 18, 24 and 25 of the Constitution. They contended that the said imposition of regulation duty through Statutory Regulatory Order (SRO) was aimed at making their imported scrap very expensive as compared to the imports by big businessmen in the form of bundled and shredded scrap. According to petitioners, the adverse SROs were issued "to solely benefit the owners of the furnaces who are large imported of shredded scrap". In the judgement, there is a direct indictment against the House of Sharifs, contained in Para 50 that reads as under:
Mr Khalid Anwar has mainly placed reliance on the judgement in the case of Ittefaq Foundry v. Federation of Pakistan PLD 1990 Lahore 121. In the cited case, it was contended that the petitioner was producer of billets and that there were other producers, producing ingots, the end-product whereof was same. In order to economically ruin the petitioner in the cited case, duty structure was changed in the year 1989 without reasonable justification and the change in the duty structure was against the rights guaranteed in Articles 4, 18 and 25 of the Constitution. The contention of the petitioner was accepted and the relief was allowed. However, with the change in fortunes, the persons were feeling the pinch of oppression in the case of Ittefaq Foundry v. Federation of Pakistan, became the rulers and thereafter, they very easily and conveniently managed to forge the treatment given to them and got the duty structure changed through notification assailed in these petitions, thereby deriving huge undue benefit at the cost of total destruction of the small importers and traders of the scrap in loose form.
The above paragraph confirms beyond any doubt how traders as rulers play havoc with the national exchequer and mint billions through tax concessions secured vide SROs thus destroying their competitors. Yet in the presence of these undeniable facts and court ruling, state agencies/institutions such as FBR, FIA, ECP, NAB, etc, plead helplessness claiming "lack of evidence" to proceed against tax evaders and plunderers of national wealth.
In two articles, 'Trail of hidden wealth', Business Recorder, May 6, 2016 and 'Tough times for PM', Business Recorder, May 13, 2016, incontrovertible evidence was produced to show abuse of Protection of Economic Reforms Act, 1992 to legalise ill-gotten wealth, blatant violations of tax laws by the family of the Prime Minister and wrong declarations made by him in papers submitted before the Elections Commission of Pakistan (ECP) in 2013 as well as false/misdeclarations in returns submitted to the Federal Board of Revenue (FBR). Astonishingly, the National Accountability Bureau (NAB) still claims that "no evidence" is available to initiate proceedings against the rulers of the day.
House of Sharif has a proven track record of destroying competitive business houses but appeasing traders that politically back them and pose no threat to their empire. They have been passing laws to protect tax evaders and were also beneficiaries of the same. Obviously, tax compliance does not suit the huge business empire of Nawaz/Shahbaz and family. It is not surprising that Nawaz Sharif, during his third term as Prime Minister, has already announced four tax amnesty schemes and now another is in the offing. In 2013, 2015 and 2016, he approved tax amnesties for tax evaders, which failed to mop up untaxed money.
On the very first day of 2016, premier Nawaz took pride in announcing a tax amnesty scheme and publicly revealed that he had been asking his Finance Minister to come up with something "worthwhile" that could be "acceptable" to the traders who had not been filing tax returns! Lamentably, as Prime Minister, he openly vowed to protect the accumulation of untaxed (black) money. He never minces words for announcing criminal and unconstitutional schemes patronising tax evaders and encouraging plunder of national wealth. This supports the allegations of the Opposition that he and his own family are guilty of these crimes as well, so he wants amnesty and immunities for all.
Nawaz Sharif has reportedly always been keen to launch tax amnesty schemes knowing that his 2013 tax amnesty shockingly fetched a negligible amount of Rs 88 million from about 3000 persons! Much-publicised and negotiated with consensus (sic) Voluntary Tax Amnesty for traders, the deadline for which was extended many times, could not lure them and only 3205 got registered against the agreed target of one million new filers!
According to FBR's own study, the contribution of traders in income tax is just 0.5% and in sales tax about 1%. Like powerful absentee landlords, the traders pay meagre income tax. However, they successfully keep revenue authorities at bay due to powerful political influence they wield. The history of income tax law is fraught with provisions that were amended and/or re-amended on account of the traders' shutter-down threats or violent demonstrations, causing legislators to get cold feet and succumbing to their demands. The governments - civil and military alike - have been extending amnesty schemes to tax evaders to whiten their undeclared incomes and ill-gotten wealth - for example, Ayub Khan's Tax Amnesty Scheme of 1958, 1969 Tax Amnesty of Yahya Khan, Zulfikar Ali Bhutto's Tax Amnesty, Self-Assessment Schemes of the 1970s, Special National Fund Bonds or Simplified Self-Assessment Scheme of the 1980s, Foreign Currency Accounts or Foreign Exchange Bearer Certificates of the 1990s, Amnesty Scheme of 2008 by PPP government, three amnesty schemes of Nawaz-Dar since 2013, various other millennium immunity schemes and the perpetual scheme in the form of the infamous section 111(4) of the Income Tax Ordinance, 2001.
Non-compliance of tax obligation is a grim reality of Pakistan. The state has failed to fulfil its basic obligations - protection of life and property, health, education, housing and transport, etc. Tax defiance and corruption in Pakistan are closely linked with rulers-cum-traders - who are unscrupulous and their greed is unbound. Plato aptly said in the Republic that ruin comes for a country when traders whose hearts are filled with greed become rulers. This is what we are witnessing in today's Pakistan.
(Concluded) (The writers, lawyers and partners in Huzaima, Ikram & Ijaz, are Adjunct Faculty at Lahore University of Management Sciences (LUMS).)
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