Senate Standing Committee on Finance chaired by Saleem Mandviwalla has proposed that the Federal Board of Revenue (FBR) prepare a general amnesty scheme as opposed to sector-specific amnesty schemes. The rationale was flawless: if the FBR can extend an amnesty scheme for the non-productive real estate sector, which according to reports was being used to launder black money, then why not provide such a scheme for the productive sectors with the capacity to generate greater employment opportunities in the country? It was a reflection of the soundness of the proposal that all the committee members, including PML-N legislators, supported it.
Pakistan Tehreek-e-Insaf's Mohsin Aziz pointed out the contradictory legislation that is under consideration: granting amnesty to the real estate sector while legislation against benami transactions has already been passed by the National Assembly with a retrospective effect. In this context, it is relevant to note that the objective of the benami transactions bill in the words of the Federal Finance Minister Ishaq Dar was to: "deal with the problem of tax evasion and black money, especially in the real estate sector, and to target transactions that are carried out in other people's name. One of the major objectives of the proposed bill is to put an end to benami transactions and to empower the government to receive such property. By defining benami transaction, the legislature intends to prohibit all persons from entering into such transactions... the bill seeks to strengthen the law through empowering provisions prohibiting holding property as benami and restrict the right to recover or transfer property held in benami." Therefore it is unclear whether the provisions of the benami transactions bill would have to be revised to take account of the amnesty extended under the real estate bill.
In addition, like other important legislation that has been passed by Pakistan's parliament seeking to make the influential accountable, there are serious concerns that the benami act too may not be implementable with respect to the rich and the politically powerful. Questions such as who would undertake the investigation and what would be the guarantee that the investigating authority would not be influenced by members of the executive for entirely political reasons are being raised - concerns that are widely believed to be legitimate premised on other investigations relating to accountability for the rich and powerful.
Be that as it may, multilaterals, including the International Monetary Fund (IMF), have always cautioned against amnesty schemes. In the second mandated IMF review under the 6.64 billion dollar recently completed Extended Fund Facility, the Fund subsequent to the grant of tax amnesty package of December 2013 announced by the Prime Minister maintained that: "the package opens another loophole in the system in addition to the ones that already exist for remittances and equity stock investment, and raises potential money laundering risks. The immunity from routine audit hinders the self-assessment process, and the amnesty - entailed by waiving penalties and interests - is likely to be detrimental to improving compliance and collections as taxpayers will develop an expectation of future immunities... The authorities consider this scheme as one-off."
To conclude, it is critical for the government to ensure that legislation is not contradictory; and it may not be tabled simply to meet the criterion that was required after becoming the 104th country in the world to sign the Multilateral Convention on Mutual Administrative Assistance on Tax Matters in Paris on 14th September 2016. Implementation is the key and one would hope that investigations would be undertaken in a non-partisan manner.
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