• Tuesday, July 23, 2019

Cabinet approves govt's first tax amnesty scheme, available until June 30

Discussion in 'Pakistani Siasat' started by Proudpakistaniguy, May 15, 2019.

  1. Proudpakistaniguy

    Proudpakistaniguy SENIOR MEMBER

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    Cabinet approves govt's first tax amnesty scheme, available until June 30
    Dawn.com
    Updated May 14, 2019
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    [​IMG]
    Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh (C) addresses a press conference in Islamabad on Tuesday. — DawnNewsTV

    After much deliberation, the government has announced its tax amnesty scheme — Asset Declaration Scheme — after it was approved by the cabinet on Tuesday.

    Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh briefed the media on the scheme. He was accompanied at the presser by Federal Board of Revenue (FBR) Chairman Syed Shabbar Zaidi, Minister of State for Revenue Hammad Azhar and Special Assistant to the Prime Minister (SAPM) on Information and Broadcasting Dr Firdous Ashiq Awan.

    "We have tried to make this scheme very easy to understand and implement," the adviser said at the news conference, adding that the scheme has realistic targets with low rates.

    "The basic purpose of the scheme is not to generate revenue but to document the economy and to bring dead assets into the economy and make them functional."

    The philosophy behind the plan is not to "intimidate" people but to encourage businessmen to participate in the legal economy, the adviser said.

    He said people will have the opportunity to become part of the scheme until June 30. Every Pakistani citizen will be able to avail the scheme except for people who have held a public office and their dependents.

    Under the scheme, the finance adviser revealed, assets within the country and abroad (except for real estate) can be whitened after paying a rate of 4 per cent. The whitened cash assets will have to kept in Pakistani bank accounts.

    For people wanting to keep their whitened money abroad, a rate of 6pc will be charged.

    For the declaration of real estate, its value will be considered 1.5 times more than the FBR-assigned value to bring it at par with the market rate, Dr Shaikh announced.

    The amnesty scheme also has the facility for citizens to whiten their benami accounts and properties before the Benami Transaction (Prohibition) Act, 2017, is enforced.

    Responding to a question, Dr Shaikh said the IMF programme entered into by Pakistan is in favour of the country. "Those who are opposing the IMF programme are the ones who had already done the same," he added.

    He said actions such as reducing the gap between imports and exports, reducing losses of state-owned entities and curtailing expenditure are in favour of the country.

    Dr Shaikh said some people were apprehensive that the electricity tariff will be increased under the IMF accord. He clarified that if that is done, those who consume less than 300 units will not be affected.

    "Pakistan has been going to the IMF again and again because it failed to increase its exports, foreigners remained reluctant to invest in the country, large state institutions remained loss-making and revenue mobilisation was not done [effectively]."

    Answering a question about how this scheme is different from the ones offered in the past, state minister Azhar said unlike the past amnesty schemes, the one being introduced now makes it mandatory for people declaring assets to become tax filers.

    He said the scheme was not being offered to generate revenue and contains an option for businesspersons to revise their balance sheets.

    In what Azhar termed as the rectification of a "major mistake" from the last amnesty scheme, people will now be required to deposit all of their cash in hand into the bank and declare it along with the deposit slip as proof.

    'Fine-tuned' tax amnesty
    Prime Minister Imran Khan chaired the cabinet meeting during which the scheme was approved.

    [​IMG]
    PM Imran Khan chaired the cabinet meeting that approved the tax amnesty scheme. — PID/File


    The scheme has been announced two days after the government reached an agreement with the International Monetary Fund (IMF) about a $6bn bailout to implement an “ambitious structural reform agenda” over a period of 39 months. It was reported last month that the timeline of the IMF bailout package had complicated the launch of government’s first tax amnesty scheme.

    The amnesty scheme was first expected to be approved on April 8. But it could not be approved in two meetings of the federal cabinet last month, before the exit of then finance minister Asad Umar.

    The ruling Pakistan Tehreek-i-Insaf (PTI) had strongly criticised amnesty schemes introduced by previous governments while it was in opposition.

    Rejecting an amnesty scheme offered by then prime minister Shahid Khaqan Abbasi in April last year, PTI chief (now PM) Imran Khan had said: “Such schemes are created to benefit the corrupt. Only corrupt elements become the ultimate beneficiaries. This is to fool the honest people of the country and encourage corrupt elements to plunder and amass wealth, only to whitewash it later on.”

    In fact, he had gone to the extent of pledging not only to reverse the scheme but also to investigate those benefiting from it, if he was voted to power. He had warned tax evaders not to take advantage of the scheme and come into the tax net; a claim that was considered to be a setback to the success of the scheme.

    Following the appointment of Dr Shaikh as Adviser to the Prime Minister on Finance last month, the government had said its proposed amnesty scheme would go ahead without any major change despite a change of command and internal opposition.

    The adviser on finance desired that it should be a people-friendly scheme, helped document the economy and brought more non-filers into the tax net instead of just generating funds. He directed the FBR to fine-tune the scheme to make it simple to understand and easy to implement, an official statement said, adding that the objective of the scheme should be to make the economy more tax-compliant and documented.

     
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  2. Path-Finder

    Path-Finder ELITE MEMBER

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    facepalm!!
     
  3. Dr. Strangelove

    Dr. Strangelove SENIOR MEMBER

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    Note:
    Public office holders and their family members wont be able to avail the benefit of this scheme.
     
    Last edited: May 15, 2019
  4. Proudpakistaniguy

    Proudpakistaniguy SENIOR MEMBER

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    Its just within one year and PTI ended up doing all those things which they said that they will never do

    [​IMG]
     
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  5. Reddington

    Reddington FULL MEMBER

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    [​IMG]
     
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  6. Imad.Khan

    Imad.Khan SENIOR MEMBER

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    The only good thing about this scheme is "Every Pakistani citizen will be able to avail the scheme except for people who have held a public office and their dependents."

    Tax amnesty schemes have never worked and the reason for it is that there has never been a crackdown on tax-evaders after the scheme's timeline had elapsed. I reckon this one will fail too and for exactly the same reason, no repercussions for not availing the scheme.
     
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  7. Proudpakistaniguy

    Proudpakistaniguy SENIOR MEMBER

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    :D

    Yaad e Niazi Azaab ha yea rab
    Sheen ley muj se Hafza mera

    But on serious note if this halal amnesty work out for economy and bring back some money from cheaters then not bad deal and 4 percent rate is good deal to white your black money
     
  8. Imad.Khan

    Imad.Khan SENIOR MEMBER

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    Lets look at it logically, if i was a tax-evader with a substantial amount of wealth hidden for all these years, why the hell would i declare them now? we have had so many of these schemes, and nothing has ever happened for me to fear that i will be held accountable, so why should i volunteer now?

    In Australia, people pay taxes, not because they want to, but because they know that they will be caught and punished if they tried to avoid paying tax.
     
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  9. DeadSparrow

    DeadSparrow FULL MEMBER

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    Makes you sad that the person leading a fearlessrevolution cheated like it was all a game and people were just some game characters that he fooled.

    You will be hard pressed to find anyone who supports this tax amnesty scheme because there's no way to justify it and it benefits a very small group of people that have zero interest in the benefit of this country.

    What makes it even worse is Imran Khan openly condemned and criticised it when he was in opposition.
     
    Last edited: May 15, 2019
  10. Proudpakistaniguy

    Proudpakistaniguy SENIOR MEMBER

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    This rule applied to previous amnesty as well
    Tax system in western world is simple yet effective and people have awareness about tax laws and its more complicated in Pakistan where implementation of law is poor in almost every institutions of Pakistan and its common for people to have benami property/assets. India also launched a tax amnesty scheme in 2016 in which it collected over $10 Billion. Pervious Pakistan amnesty scheme in 2018 pulls in Rs 80 billion in tax

    Read more at:
    //economictimes.indiatimes.com/articleshow/64805560.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst


    Below are some of the merits and demits of tax amnesties in Pakistan.

    Merits

    1. Tax amnesties are a quick source of revenue for the government and provides rapid funding to the government for its projects.
    2. Tax amnesties are a measure to bring undocumented people in the tax net.
    3. Tax amnesties are helpful in recovering from any budgetary shortfall.
    4. For public it’s a good opportunity to bring the undocumented assets/income in the documented economy.
    Demerits

    1. Tax Amnesties are a big demoralization and injustice to current honest tax payers
    2. The tax rate in amnesty schemes in Pakistan is way too low. These results in people being more inclined towards amnesties rather than compliances.
    3. Tax amnesty schemes in Pakistan are introduced are wrong point in time. E.g. 2018 amnesty scheme has been promulgated at a point where the previous government has completed its tenure and the new government has not taken over the charge. Ideally the amnesties should be announced at the very start of the government so that the government can crack down the crooks in rest of its tenure.
    4. The frequency of tax amnesty schemes in Pakistan is way too high. On average there is a tax amnesty scheme every 3-5 years. Ideally a tax amnesty should be given once every 15-20 years.
    5. The government often relies of such amnesty schemes to achieve its revenue target which is a bad performance indicator.
    6. Tax amnesty schemes are normally benefitting the big giants and not the common man. Though this loophole seems to have been plucked in the current amnesty scheme.
    7. There is no proper follow up mechanism in Pakistan to ensure compliance of the people who come under the tax net.
    As indicated above the drawbacks of a tax amnesty far outweigh the benefits. Yet it can only be termed as a “necessary evil”
     
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  11. DeadSparrow

    DeadSparrow FULL MEMBER

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    Another reason people give taxes in Western world is because they know their money gets spent on them.

    For example in Italy the healthcare is free and run by taxpayers money and it really is free unlike in Pakistan where the hospitals sell the medicine and force people to buy it from outside or the doctors treat patients like they're not human at all.

    Pakistan doesn't need metros but it needs education and healthcare improvements.

    Sad to see even Imran Khan felt inclined to start a useless project like metro buses
     
  12. xyxmt

    xyxmt ELITE MEMBER

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    what was haram under PMLN becomes halal under PTI
    slowly patwaris are looking more like angels and less like devils
     
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  13. DeadSparrow

    DeadSparrow FULL MEMBER

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    Reminds me of Rafis song :D

     
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  14. Imad.Khan

    Imad.Khan SENIOR MEMBER

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    As per dawn the recovery was Rs97Billion

    https://www.dawn.com/news/1419532

    who would that small group of people be that will get benefit from this scheme?

    agreed 100%. People in KPK were happy with the previous PTI govt until they decided to start the Peshawar metro.
     
  15. Proudpakistaniguy

    Proudpakistaniguy SENIOR MEMBER

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    Dude western countries collect tax for everything road tax, parking tax, council tax, national insurance etc so you pay money and get facilities . UK also charge you prescription charge and these countries are not as populated as our countries but still you have to wait for months to get appointment . If you ever visit governemmt hospital in Pakistan then you will surprise to know that they have one doctor deal with 100 or even more patients on daily basis. Problem with Pakistan is limited resources and huge population so we cannot compare our countries with west. West is well oragnised in eveything. I aslo dont agree that metro is useless because i have seen the congested traffic in big cities where people get stuck in traffic for hours and cannot reach college/uni/ work on time. Problem with peshwar metro is poor planning and not finishing the project on time. These projects may not matter to us living in west but those who travel daily in Pakistan know the importance of good public transportation .