The Pakistan Economy Watch (PEW) on Sunday said that tax amnesty scheme would prove a failure in collecting the targeted taxes and broadening the tax net.
“It indicates that government has no intention to bring its favourite sectors in the tax net, introduce proper asset-seizure laws to confiscate untaxed assets, and bring back looted money from abroad,” said PEW President Dr Murtaza Mughal. “Move to purify ill-gotten money amounts to encouraging corrupt elements with billions in illicit wealth which is detrimental for the society,” Mughal added.
The amnesty for tax evaders has been announced to fill the budgetary gap but the funds raised through this scheme will be insufficient, he said. He said that such measures work in the short run but it is not a permanent solution to a budget gap; authorities should concentrate on permanently broadening the tax base and eliminating unjust exemptions.
The PEW president said that such schemes always create the danger of overlooking structural gaps and reforms, adding that Pakistan needs an improved tax model that can generate satisfactory resources for the government without hampering economic growth.
The current tax model has failed to transfer resources to public use in an efficient manner ensuring social justice for weaker sections of the society. Dr Murtaza Mughal said that over-taxing some sectors while supporting favourite sectors has a negative effect on the economic and revenue systems. FBR’s emphasis on meeting revenue targets without considering its impact on the economy is a self-defeating exercise, he added.
Mughal said that concentration on industrial expansion can provide much-needed funds without hurting the honest taxpayers which is yet to be realised by the authorities. He said that amnesty schemes, support provided to parallel economy, exemptions, helping speculative business, ignoring tactics by multinational companies and oversized state machinery are some of the issues that can bring country down.
Reliance on foreign experts, lack of interaction with the taxpayers, facilitating monopolies and increasing tax burden on poor are also contributing to the situation, Dr Mughal said.
