Will Pakistan’s Amnesty Bring Transparency?
How is this one different from others? Will the 10th Amnesty Scheme help in Documenting the Economy? Will people volunteer to disclose their Hidden Assets? Or this is going to be another futile attempt that will only help to pocket few Bucks, because the size of penalty is tiny in size and the tax evaders have nothing to worry about as the punishment is of minor nature.
Two types of wealth can be found abroad. Genuine money earned against business dealings and salaries earned by the overseas Pakistani professionals and the second type consist of illegal funds transferred abroad.
Overseas Pakistani professionals are no more than 1-Million & nearly half of them must be carrying dual nationalities, they have nothing to worry. Of the remaining half few thousands may consider, but the offer size may not serve the purpose.
Tax evaders that have transferred money abroad either has another passport or can easily get dual nationality either by paying fee up to $ 50.000 or by investing $ ? million to USD 2 Million in North America.
Our problem is that we are not sure about the size of illegal flight of money. Estimate of claims of hidden foreign assets varies from USD 350 Billion to USD 50 Billion.
In 2010 Pakistan’s Financial Wizard SHAUKAT TAREEN informed Parliamentary Committee that in FBR, annual corruption is worth Rs 500-600 Billion. If we take his number, in 10-years, it roughly amounts to Rs 6 Trillion.
According to May 11, 2019 report appearing in “BUSINESS RECORDER” SHABBAR ZAIDI (FBR Chairman) has said that size of parallel economy is 30%. With due respect, I tend to disagree due to following reasoning. Bank Deposit is Rs 13.1 Trillion, Advances is Rs 7.85 Trillion, Currency in Circulation Rs 4.81 Trillion and Investments by Banks in Government Paper and 5% Cash Reserves is Rs 7.35 Trillion.
Importantly, Real Estate is roughly 20% documented because the registry is not based on transacted amount, where major part of evaded funds are invested that allows parking of 80% of the undocumented money. This whole argument is to support my view that the size of undocumented over 60%.
FEW SUGGESTIONS
-Reverse dependency from 62-65%
-Weak Reporting System needs to be sharply improved
-All Income should be Filed
-Document Sales Tax on Service & Actual by (Bringing in Tax Net)
-Fair Income Distribution (Income & Sales Tax) between Federal & Provinces after 18th Amendment, which is constitutional requirement
The big question is that why would people disclose their hidden money or bring back their undeclared wealth? This certainly looks another desperate move that may fetch some money but may not be enough to plug the Revenue target.
Past history will tell that earlier, all 3-militatry leadership and 6-Democtratic governments has gone soft on tax evaders. Nothing can be achieved without accountability and transparency, tax evaders do not have fear of stiff penalties or threat of prosecution.
Or else IS DEMONETIZATION next STEP?
(Disclaimer applies in my post, which means that the perspective is my personal view. I have made every effort to ensure accuracy of information provided. However, accuracy cannot be guaranteed. This article is strictly for information and not intended for Trade or Business Transaction).