Evaluation of the Finance Act 2024: Implications on Fundamental Rights and Constitutional Compliance

Summary

Does Pakistan's New Finance Act Violate Your Rights? ????

The Finance Act 2024 aims to boost tax collection, but its methods raise red flags. Travel bans, utility cuts, and unequal treatment for overseas Pakistanis? This article dives deep into the Act's impact on fundamental rights and what it means for YOU.

Click to learn:

• How the Act might violate your right to travel freely.
• Why overseas Pakistanis could face unfair penalties.
• Whether the Act prioritizes compliance over basic human dignity.

Is the Act constitutional? This analysis will help you decide. ??

Introduction

The Finance Act 2024, enacted by the Parliament of Pakistan, is pivotal in shaping the country's financial and economic policies. It is essential to evaluate this Act against the Constitution of Pakistan, particularly the Fourth Schedule, which delineates the legislative powers between the Federal and Provincial Governments. Additionally, this analysis examines the Act concerning fundamental rights enshrined in the Constitution, ensuring it upholds principles of justice, equality, and non-discrimination.

Constitutional Framework

The Constitution of Pakistan, under Article 70(4), provides a detailed legislative framework through the Fourth Schedule, including the Federal Legislative List and the Concurrent Legislative List. The Finance Act must conform to these legislative boundaries to ensure its legality and constitutional validity.

Federal Legislative List - Part I

Part I of the Federal Legislative List includes areas such as:

1. Defence of Pakistan: This encompasses military forces and related industries.
2. External Affairs: This includes treaties and agreements with other countries.
3. Currency and Legal Tender: Regulations regarding the national currency and financial instruments.
4. Federal Taxes and Duties: This includes income tax, sales tax, and other federal levies.

The Finance Act 2024 introduces several amendments and new provisions concerning federal taxes, including changes in the Petroleum Levy and modifications in the taxation structure for certain industries. These provisions align with the powers vested in the Federal Government under the Federal Legislative List, ensuring that the Act remains within the constitutional framework.

Fundamental Rights and the Finance Act

The Constitution of Pakistan guarantees fundamental rights to its citizens, which must be upheld by all legislative measures, including the Finance Act. Key rights relevant to financial legislation include:

• Right to Equality (Article 25): Ensures equal protection under the law and prohibits discrimination.
• Right to Property (Article 23): Allows citizens to acquire, hold, and dispose of property.
• Right to Economic Activity (Article 18): Grants freedom to engage in lawful trade or business.

Travel Restrictions and Penalties

The Finance Act 2024 includes provisions that impose severe penalties on individuals who file their tax returns late. Specifically, individuals not on the Active Taxpayer List (ATL) face restrictions on their ability to travel abroad. This measure particularly affects overseas Pakistanis, who, despite residing and earning abroad, must prove their ATL status when leaving Pakistan.

Specific Penalties and Restrictions

1. Travel Restrictions: Individuals not appearing on the ATL can be stopped at the airport and required to provide proof of their ATL status, even if they have not earned any income from Pakistan.
2. Family Members: The families of overseas Pakistanis may also face travel restrictions, requiring the spouse to prove ATL status to visit abroad.

These measures aim to increase tax compliance but raise significant concerns regarding their impact on fundamental rights.

Impact on Fundamental Rights

Right to Equality

The imposition of travel restrictions based on ATL status may result in unequal treatment. Overseas Pakistanis, who do not earn income in Pakistan, face the same penalties as those who do, which may be considered discriminatory.

Right to Freedom of Movement

Article 15 of the Constitution guarantees the freedom of movement. Restricting the travel of individuals based on their tax status, especially when they are not earning in Pakistan, could be seen as an infringement on this right.

Right to Non-Discrimination

The requirement for families of overseas Pakistanis to prove ATL status may disproportionately affect certain groups, potentially leading to indirect discrimination.

Utility Cut-Off for Non-ATL Individuals

The Finance Act 2024 introduces stringent measures to enforce tax compliance, including the discontinuation of basic utilities for individuals not listed on the ATL. This measure aims to incentivize timely tax filing and discourage tax evasion. However, the practical implications of such a measure raise significant concerns:

Electricity and Gas Cut-Off

Individuals who fail to file their tax returns on time and are not listed on the ATL face the penalty of having their electricity and gas supply cut off. This measure also affects overseas Pakistanis who do not earn income in Pakistan but own property and thus might be unfairly penalized.

Impact on Fundamental Rights

Right to Life and Dignity

The provision of basic utilities such as electricity and gas is essential for maintaining a minimum standard of living. Cutting off these services can severely impact an individual's quality of life and dignity, thereby potentially infringing on Article 9 of the Constitution.

Right to Equality

Imposing utility cut-offs uniformly on all non-ATL individuals, regardless of their income sources or residential status, could lead to unequal treatment. For instance, overseas Pakistanis who do not earn in Pakistan but own property might be unfairly penalized, contradicting the principles of equality under Article 25.

Right to Non-Discrimination

Requiring proof of ATL status for basic utilities could disproportionately impact certain groups, such as low-income individuals or those unfamiliar with the tax filing process, leading to indirect discrimination in violation of Article 26.

Judicial Review and Remedies

Any provision that potentially violates constitutional rights can be challenged in court. The judiciary, particularly the Supreme Court of Pakistan, has the mandate to review such provisions and ensure they align with constitutional protections. If deemed unconstitutional, these measures could be struck down or amended to better align with the fundamental rights guaranteed by the Constitution.

Conclusion

While the Finance Act 2024 aims to enhance tax compliance, its provisions related to strict penalties, travel restrictions, and the cut-off of basic utilities must be carefully balanced against the constitutional rights of individuals. Ensuring compliance should not come at the expense of fundamental freedoms and equality. Judicial oversight and potential legislative amendments may be necessary to align these provisions with constitutional guarantees.

This comprehensive evaluation underscores the need for a balanced approach that upholds the rule of law while promoting tax compliance, ensuring that the rights and freedoms of all citizens, including overseas Pakistanis, are protected. Aligning the provisions of the Finance Act with constitutional mandates will ensure a just, equitable, and prosperous society, reflecting Pakistan's commitment to constitutional governance and the protection of fundamental rights.