Why not amnesty for all?

A number of businesspeople are raising a pertinent question, even though it may prove to be controversial, about a recent federal government decision: If the government can offer tax amnesty to one sector, or industry, then why can't it extend it to the whole economy? These are quite understandably extraordinary times, which is why the amnesty was necessitated in the first place, but that only validates the argument in favour of letting all sectors enjoy the same incentives. Normally, the question of an amnesty would not even arise, of course, but with the economy tumbling into recession and the lockdown having to be extended, the government will have to do whatever it can to get some amount of money flowing through the system once again. For the time being, apart from relying on generosity of foreign donors all the government can really do to lubricate the economy is offer a bunch of carefully coordinated incentives. And it does seem, regardless of the ethical and legal arguments, that tax-breaks that allow black money to also pump through the economy might just provide the buoyancy that is needed as long as the real economy is jammed.

However, while all this will need extensive consultations between all sorts of stakeholders, there's still the worrying chance that the much touted construction package might not even see the light of day. It has a problem at its heart that might render it non-functional since the amnesty is available to buyers and builders only with regard to no questions asked about sources of money, etc., but there's no protection offered to sellers. For example, if a party sells, for which it is liable to capital gains tax (CGT), it wouldn't really want to do all the documentation on the actual value of the transaction because then it would have to suffer a hefty amount in tax. The buyer, on the other hand, would be only too happy to document the transaction at the actual price so that the calculated sum of money could all become white. Therefore there's a good chance that it would become a non-starter ab initio. Should that happen, which is likely unless some glaring inconsistencies are removed, it wouldn't just wipe smiles off of tycoons lining up to invest in construction, but also spread an air of despondency across the market.

It would also mean that a lot of time has been wasted in achieving very little or nothing at all. Yet this is precisely what to expect whenever the government decides to legislate on crucial issues without consulting with all market players. In such times especially, when the price of failure is very high and time for action is very limited, it is crucial to involve all stakeholders in the entire process; right up to the stage of drafting the legislation. Such issues cannot be resolved in cabinet meetings, no matter how large the force of special advisors. That is why it is important for the government to talk to the businessmen that will avail the incentives. They know the intricacies of the market and the situation on the ground better than anybody else; and their input is vital. And their questions should be answered. Why, if the government is prepared once again, to keep the Federal Board of Revenue (FBR) off the backs of people willing to invest in one sector, and justify it to the lenders that keep us solvent, is it not able to do the same for other sectors as well? Also, there is a very small window in which to finalise the action plan; so the sooner the government holds discussions with all market players the better. The economy will stay non-functional till something is decided. And with every passing week it is incurring more losses, while the spread of the coronavirus is widening, which means it will also come under increasing pressure from the healthcare sector as time passes.