Prime Minister Shahid Khaqan Abbasi has announced a new tax amnesty scheme for non-filers, giving them a last chance to come under the tax net. It is unfortunate that in a country of over 200 million people, only 1.2 million are registered taxpayers and even out of them, only 700,000 actually pay taxes. Will the latest move lure tax evaders to become filers is a million dollar question as it is not the tax money alone which keeps the potential taxpayers away from coming into the tax net, but the system of tax collection which is marred by alleged corruption and mismanagement. Announcing the package of incentives for non-filers, the prime minister hoped the move will help collect revenues for the national exchequer. He has also declared that the national identity card number would be converted into national tax number to monitor tax compliance by all citizens across the country. The prime minister has made a history by giving relief to the salaried classes as a complete tax exemption will be granted to the citizens having yearly income of up to Rs 1.2 million.
However, maximum percentage of 15 percent will be levied on the income above Rs 4.8 million per annum. The owners of the offshore companies are the main target of the amnesty scheme and now they have the chance to legalize their undeclared assets in the country or abroad after paying only nominal penalties. They would also be granted one-time exemption from the accountability laws. The government would like to monitor financial records of the citizens to stop tax evasion and dispel a general impression that taxpaying is option and not an obligation. However, the potential taxpayers will be forced to pay taxes no matter they like it or not and tax evasion will not long be pretermitted. The announcement of the amnesty scheme is a right step in the right direction and it is the best opportunity for the owners of offshore companies to declare their assets and get legal cover. However, there is a need to develop a system to make the tax evasion impossible. This can be done by developing the system and not by giving unbridled powers to the official machinery. Until and unless the policymakers work on this subject and devise a system, the culture of tax evasion will continue to flourish.
