Tax amnesty scheme proves failure: PEW

ISLAMABAD: The Pakistan Economy Watch (PEW) on Sunday said tax amnesty scheme proves failure of the authorities to collect targeted taxes and broaden tax net.

It indicates that government has no intention to bring favourite sectors in the tax net, introduce proper asset-seizure laws to confiscate untaxed assets, and bring back looted money from abroad, it said. Move to purify ill-gotten money amounts to encouraging corrupt elements with billions of illicit wealth which is detrimental for the society, said Dr. Murtaza Mughal, President PEW.

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 eliminate unjust exemptions.

Dr. Murtaza Mughal said that such schemes always raise 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 is putting the economic and revenue system down. FBR’s emphasis on meeting revenue targets without considering its impact on the economy is a self-defeating mechanical exercise, he added.

Dr. Murtaza 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 issued 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, said Dr. Mughal.