The much-hyped tax amnesty scheme launched by the government to broaden tax net received mixed response from potential taxpayers. The genuine taxpayers criticize the scheme on the ground that it is an attempt to whiten black money and insult to those who regularly file their tax returns. But those who favour the scheme count its success as 9,000 returns have been filed and Rs 850 million are deposited with the government exchequer since the scheme started. The scheme also resulted into documentation of working capital of up to Rs 85 billion. According to experts, the government could not achieve 50 percent target, but even then the scheme is not a failure. The government is able to collect good revenue as well as added new taxpayers to its tax base. There is no denying the fact that tax-to-GDP ratio in the country is the lowest in the region and foreign donor agencies want Pakistan to enhance the tax net. However, the government was forced to introduce this scheme to resolve the issue of withholding tax on bank transactions, a step the government took to bring the non-filer into the tax net.
As a matter of fact, not all the account holders are traders or businessmen as deduction of 0.6 percent withholding tax on Rs50,000 withdrawal has brought the common man on its knees. What the government needs to do is to register every business concern, either large or small, in the country. Every business should be member of the chamber of commerce and deposit its annual fees under the head of the government tax. The government has to evolve a working strategy to differentiate between different sections of society. The businessmen and ordinary men should not be treated equally. If a mechanism is enforced there is no need to launch a tax amnesty scheme and the tax net will gradually increase with the passage of time. The government has so far extended the deadline for the tax amnesty scheme up to May 31 and some economists are of the view that the government is going to wind up this project without announcing it in public.
The main objective of the government is to document the economy, but the scheme has lost its potential. Keeping in view the official working in the country where corruption has been institutionalized, an ordinary businessman prefers to stay away from the government agencies. Until the government launches a fair and transparent tax collection mechanism, the country will continue to face capital flight or massive tax evasion. Enacting tough laws will serve no purpose as any government scheme will falter half way due to corruption and mismanagement.
