Reportedly, the PTI government is planning to introduce a new tax amnesty scheme aimed to attract non-filers and those filers having undeclared local and foreign assets. Since talks for a bail-out package from the International Monetary Fund (IMF) are ongoing, the finance ministry chalked out this strategy in order to increase tax net and returns before the package is secured.
While the purpose seems noble, Prime Minister Imran Khan should be reminded that before the elections, he was very much against such schemes when the previous PML-N regime introduced a similar policy.
Is it a scheme or a scam? Why should it be allowed to follow the policy when it used to deride the opposition for the exact same thing? There doesn’t seem to be any difference except the fact that this time, there are likely some political leaders affiliated with the PTI who may wish to declare assets for the sole reason of evading the law.
Money laundering and tax evasion are one of the biggest issues faced by Pakistan’s economy. Increasing imports, sliding exports and rising national debt have essentially choked the financial outlook. Moreover, market capitalisation has decreased significantly over the years. From a peak 43% share of nominal GDP in 2007 to just under 25% as of now. This is quite alarming, to say the least.
Such factors would invite nothing but uncertainty for local and foreign investors who have to look after the costs of doing business in the country. Even the exchange rate is worsening owing to depreciation of the rupee’s value. Within the last few months alone, the dollar’s rate has gone up by about 40 rupees.
On regional economic front, there’s much need to be done to secure sustainable trade ties. Indeed, national security dynamics play a pivotal role in shaping policies, but nobody really likes to deal with states that are financially dependent on others. The national treasury roughly stands around $8 billion when compared to about $300 billion in India.
While the new government can’t be entirely blamed, instead of introducing amnesty schemes, it needs to regulate the tax culture through a countrywide awareness program with assistance sought from the finance and information ministries. The menace of black money can only be contained through stricter regulations and promoting an investment friendly environment. *