- Now, whiten illicit foreign wealth
January 2016 began with a government New Year gift for tax evaders on payment of ludicrous one percent tax on their black money, and ended with a December present to enterprising citizens who ‘absent-mindedly’ forget to mention real estate holdings in annual tax returns, again with a minimal penalty. Both schemes still failed to come up to rather buoyant expectations, and the latter was recently overhauled after the property business nearly collapsed. In fact, a hat-trick of amnesty schemes since 2013, when the ruling PML-N swept into power, has yielded little of note, and wary investors are too savvy to take any chances with a government that froze Foreign Currency Accounts in 1998, after first encouraging their growth and holding out assurances of their secure status. But it seems no lessons have been leant from past failures, as yet another one-time amnesty scheme to provide legal cover to Pakistanis’ off-shore and other foreign wealth, the Foreign Assets Declaration Scheme (FADS, an apt acronym), prepared by the FBR is in the offing, as admitted by the prime minister on Wednesday. If adopted, the government expects this measure to net $2-6 billion in a short period (before the precariously poised elections?) provided constitutional and legal guarantees are extended against the inquisitive NAB and harassing FBR, with a three to five percent tax rate.
Reportedly, the Indonesian precedent, where a similar incentive to legalise foreign assets netted $30-40 billion, tipped the scales in favour of this step. But this is akin to putting the cart before the horse. For the real prerequisites for our badly under-performing economy were mentioned later by the PM, namely broadening the tax base and documenting the wealthy, using NADRA technology, lowering taxes, tax reforms, and stabilising the massive deficits opening up all over the fiscal front. The IMF, World Bank and political parties PTI and PPP, too, look askance on artificial, short-cut, amnesty schemes as they discourage honest tax-payers and indeed facilitate tax evasion but,‘no amnesty from amnesty schemes’, seems to be the motto, formula and sole ‘genius’ against all our financial afflictions, while a vibrant tax culture stubbornly evades us.