Nobody learns
If the traders’ tax amnesty scheme is the N league’s final answer to the tax collection problem – particularly the withholding tax deadlock with traders – then it will find not just revenue, but also political problems mounting by the time of the next general election. As every such scheme, save perhaps the first introduced by Ayub Khan, has proved, such exercises make negligible difference to the revenue figure as well as the tax net, and the only people who benefit are non-filing hoarders on the lookout to legitimise their illegal and undocumented wealth. In practical economic terms, there is hardly a more blatant admission of incompetence.
Tax collection was, after all – along with energy and security – Nawaz’s main promise on the campaign trail. Nobody would be spared, not even the party’s core business-community constituency, and the tax net would broaden, triggering higher income and subsequently employment, everybody was told. Yet half way through the present cycle, tax collection has actually decreased, pushing Pakistan among the worst tax-to-GDP ratios in the world. The ruling party will find it difficult to appease an angry opposition since, as usual, the only people to benefit from this exercise will be just the kind that the law should be forcing to obey proper procedure and pay taxes conventionally.
PML-N has struggled with the black-money, white-money problem for a while now. There is, of course, a rationale behind luring non-filers. But first alternative avenues must be cut off. Since time immemorial black money has been routed outside and back through remittances with the government sitting on the side. In isolation, the amnesty has little more than face value. And it is not as if the wider economy is much to write home about. Growth is chronically low, employment and wages stagnant, and uninterrupted energy still a distant dream. Other avenues of raising revenue, like privatisation, are also being botched one after another. The government will have to pull its socks up sooner rather than later since mere rhetoric never works for an incumbent up for a re-election.
