Demonetize the 5000, 1000 notes in Pakistan?

[Margarita]

What % of total transactions is done with cash in Pakistan? In India it was around 90% before demonetization which was very shameful compared to countries like Canada where it is less than 10%. We will see how much improvement is made in a couple of months.

I will tell a very visible difference. I take Ola Share or Uber pool most of the time for traveling purpose in Bangalore. Before demonetization, majority would pay the driver with cash, however, post demonetization I have not seen a single person paying with cash but e wallets.

 

[Zibago]

We will tax those whos deposits don't match income tax statements.


Pak have 0.5% ppl paying taxes..... Leaders haven't taken any steps to eliminate the corruption and I don't think I will see the nation prospering in my lifetime...

Even if a security guard deposits 50000 in 3 years and take them out at once he pays tax on his saving wtf?

 

[EpiiC]

Even if a security guard deposits 50000 in 3 years and take them out at once he pays tax on his saving wtf?

Your making assumptions here, ppl will need to be checked up with the declared statements to come to reasonable conclusion.

 

[H!TchHiker]

No this will not work

1) Less than 2 % percent ppl keep black money in cash. Money has time value and no one will keep it in hard form.Most of the black money in case of Pakistan channeled to Real Estate , Stock Market and property outside Pakistan.

2) You can't stop this by demonetization..Black marketer knows how to convert black into white. Initially when the money comes in a part of it may be kept in cash but slowly over time it is circulated back into the economy. Evading tax and illegal earn mostly refereed as black money..Even if you do it once the cycle will start again. What the government defines as black money is usually a response to inefficient laws and tax norms .

3) Demonetization in growing economy is a curse, you are effectively wiping out the cash out of the economy which is heavily depended on cash transactions.It will slow down GDP and deflate your economy and its a perfect disaster recipe.More than 40% money flotation is in cash.Imagine the havoc

4) We need to study the effects of this in past. IG Patel did the same in 1978 under Morarji’s leadership, when he scrapped all rupee notes above Rs. 100/-and same is happened in Pakistan once .Result again we have an empire of Black Money. In 1982, in order to reduce tax evasion, curb corruption and manage liquidity, Ghana demonetized its 50 cedi currency note. The move backfired, with the public losing faith in the banking system and switching over to physical assets and foreign currency.Result failed .
An anti-corruption crackdown was conducted by the military government led by Muhammadu Buhari in 1984. He issued new currency notes with new colours so that old notes would be rendered unusable within a limited time frame. The goal to fix a debt-ridden and inflated economy was not achieved.Result failed.
In order to curb the black market, the country's military invalidated 80 per cent of the currency in 1987. The first ever student demonstration was held against this move. Moreover even now Maymar has one of the highest corruption and black marketer problems..Result failed.
Under the leadership of Mikhail Gorbachev in January 1991, the erstwhile Soviet Union withdrew 50 and 100 ruble notes.Economy later on after that even fail.Result failed.

So what is the way to go
1) Strict tax laws (Even you do all others thing if this is not taken care of you can't stop this: i can re-route the money with current laws even if all thing go through cards or banks) .Mold the law until it breaks is the fundamental of tax evasion and black money..

2) Finish this amnesty schemes ..Ever wonder why Governments bring this..Pay 2% tax or 3% and legalize the money..This is the biggest roobery Pakistan has to face by all the subsequent government. You can search and noticed every government Military and Polictial do comes out with this idea. If i am a regular tax payer i would consider myself as a STUPID .This is dishonesty to the honest taxpayers.

3) Linking of economy c) Strong powerful FBR d) Agreement with countries to declare the identity and source or remit it back otherwise..d) Digitize economy with more use of e-banking and cards

4) Increase the net tax base..Can you imagine the retail sector contribution towards GDP was 17.3 percent, but the tax contribution by the sector was a meagre 0.05 percent .
Traders to go on strike against withholding tax today ,
Six parties back traders' strike call against withholding tax..These traders don't want to become fillers and resort to this
Agriculture income Heck i will show 1 billion income and 0 tax because i am exempted on the name of poor farmers

5) Stop the flow of capital from Residents.No paksitani/individual can invest outside for next 5 or 10 years. This type of law is prevalent in many countries....
The country with a population of 180-200 million has only 3.6 million income tax registered persons. A big Joke..

 

[Zibago]

Pakistan might be more shameful than India.. just barely 16% of the population have bank accounts.

As long as the .5% tax on cash withdrawal stays account holders will stay low
https://propakistani.pk/2016/11/21/banking-transactions-fall-cash-reigns-supreme-pakistan/

Your making assumptions here, ppl will need to be checked up with the declared statements to come to reasonable conclusion.

The law applies to all who have bank accounts even if they are unemployed thats why now people are now avoiding banks

 

[EpiiC]

^^^ I can't reply to messages with links.... New accounts are limited...so you would suppose scrapping that 0.5 withholding tax to encourage people to use the banking system...

 

[Hyde]

As long as the .5% tax on cash withdrawal stays account holders will stay low
https://propakistani.pk/2016/11/21/banking-transactions-fall-cash-reigns-supreme-pakistan/


The law applies to all who have bank accounts even if they are unemployed thats why now people are now avoiding banks

Its been reduced to point 3% now... and these taxes can be refunded/adjusted upon filing of tax returns so its not indefinite tax on customers, just an attempt to bring them under tax net

 

[H!TchHiker]

Its been reduced to point 3% now... and these taxes can be refunded upon filing of tax returns so its not the tax on withdrawls if you know what I mean

Exactly the purpose of this was to bring Retailers and Traders in Tax net not to impose it otherwise

 

[Indus Pakistan]

Did you see what happened in India?

This thread is at @EpiiC request. I am ambivalent about this and reading what our new member has to say before I can offer any thoughts on this subject. I, agree from personal experiance that many of the well off in Pakistan have their savings in dollars. sterling pound etc. In addition investment in Dubai property is common. I know of one relative in Pakistan who is a senior government official and has made millions ( British sterling millions) and has invested in Dubai, UK as a hedge against being caught.

I know he has been investigated more than once as his properties in Pakistan are worth over £900,000 and there is no way on earth his salary which is generous by Pak standards could ever have sustained those purchases. When the heat buily up he asked my dad to show that he had paid most of funds from UK as investment in Pakistan. That is when I found out the true scale of money pilfered from the government. Just want to say he is not alone - most of his peers are in it and this is the rule rather than exception. Indeed not doing this can work against promotion because some of the money is paid to higher up including politicians to ether stay quite or help out in covering up the scams.

 

[Khafee]

As long as the .5% tax on cash withdrawal stays account holders will stay low
https://propakistani.pk/2016/11/21/banking-transactions-fall-cash-reigns-supreme-pakistan/


The law applies to all who have bank accounts even if they are unemployed thats why now people are now avoiding banks

What is the min. cash that can be withdrawn without the tax being incurred?

 

[H!TchHiker]

What is the min. cash that can be withdrawn without the tax being incurred?

49,999 per day ...However if you are registered tax filer whatever tax you paid you can adjust it on filling annual tax return.

 

[Khafee]

49,999 per day ...However if you are registered tax filer whatever tax you paid you can adjust it on filling annual tax return.

Just thinking loud:

How about I give my tax registration number to the bank and they don't tax me? Is that possible?

 

[marbella]

wait and watch. learn from mistakes. execute it in a better way, if it gives positive results.

 

[H!TchHiker]

Just thinking loud:

How about I give my tax registration number to the bank and they don't tax me? Is that possible?

No...They are not entitled to do this..This is the domain of FBR...

 

[Khafee]

No...They are not entitled to do this..This is the domain of FBR...

Well maybe they could implement this in the future and streamline things for the common man.