Pakistan’s business tycoons are frightened in the wake of unbridled powers given to FBR in shape of access to bank accounts which could result into increasing hole of black economy in this country.
The business community has termed this provision of law as draconian which will be used by the tax machinery for arm twisting methods. In view of deteriorated law and order situation, the provision of this law and publishing of tax directory about all taxpayers will help extortionists to identify easy victims in major cities of the country.
The Federal Board of Revenue (FBR) has issued Statutory Regulatory Order (SRO) 115/1/2014 whereas the access to bank accounts was allowed in case of non-NTN holders.
As per a statutory regulatory order issued by FBR, banks are bound under section 165A of the Income Tax Ordinance to share with FBR the non-NTN holders’ monthly statements of deposit, credit card payment and currency and suspicious transactions.
The government had inserted this clause in the Finance Bill 2013-14 which was approved by the Parliament. Then this clause was challenged into the superior court and stay order was granted.
Now the FBR has notified rules for these provisions binding the banks to provide access to bank accounts. The FBR high-ups say that they would ensure access to bank account in accordance with newly placed rules only when the stay order of the court would be vacated.
They said that they would not allow usage of this clause for harassment purposes but it would be used cautiously with the objective to broaden the narrowed tax base.
Moreover, the rule obliges every bank to furnish to FBR an annual statement of written-off loan exceeding one million rupees. FBR has also asked the banks to give it online access to their database of the clients, containing details of accountholders and all their transactions.
Now the business community has extended its warning to the government that if the FBR did not drop its plan the depositors might withdraw their amount from bank accounts.
As the law and order situation is already in bad shape, flight of capital persists and foreign investment remains low, the government must desist from taking such steps that are likely to trigger severe backlash across the country.
The business community is arguing that this move would shatter confidence of depositors and black economy might witness increase in manifold in months ahead. The access to bank accounts is available to only 2 percent of population and now State Bank of Pakistan in collaboration with UK-based DFID is working for increasing access to banking facilities in the country.
Now the government should re-think before implementing this policy in the larger interest of the country.
