ISLAMABAD - The tax amnesty scheme is nothing but akin to a financial NRO and it would be a gross injustice to the honest taxpayers if it is implemented in the country, said Dr Ashfaque Hasan Khan, an eminent economist.
The government on Monday introduced ‘The Tax Laws (Amendment) Bill, 2012’ in the National Assembly, launching the tax amnesty scheme that would allow evaders to whiten their black money and assets at home and abroad within three months against a nominal one-time charge to generate around Rs 100 billion. However, talking to The Nation, Dr Ashfaque Hasan Khan has termed it a “financial NRO” that would discourage the honest taxpayers of the country who are regularly paying their taxes. 
Dr Ashfaque Hasan Khan said that International Monetary Fund (IMF) in its First Post-Programme Monitoring (PPM) report on Pakistan has shown unhappiness over the tax amnesty scheme which the government intends to implement shortly. The government must refrain from such schemes if it wants to maintain good relations with the international financial institutions, he added.
Dr Ashfaque Hasan Khan said that former President Pervez Musharraf had also introduced such tax amnesty schemes in 2002 that generated only Rs 2 billion. Therefore, he said such amnesty schemes could not help the government to reach the target but it would discourage the honest taxpayers who are regularly paying their taxes.
Former State Minister for Finance and Economic Affairs Umer Ayub Khan has also termed the tax amnesty scheme as “financail NRO”. Talking to The Nation on Monday, he said that government should reform its tax collection meachnism and depoliticise the Federal Board of Revenue (FBR) for broadening the tax base of the country. He further said that tax amnesty scheme is only for the short run and it could not help in revenue generation in medium and long run.
He added that FBR should use its database to trace out the non-taxpayers of the country.
Another noted economist Saqib Shirani, who was advisor to the Finance Ministry in the current government, has also opposed the said tax amnesty scheme. Shirani said that government should punish the tax evaders by taking their property, assets into the custody instead of announcing schemes to facilitate them.
On a question, he said that amnesty schemes never broaden the tax base of the country, as the government’s economic team believes that tax net of the country would be expanded by introducing the tax amnesty schemes. Apart from economists, the International Monetary Fund (IMF) has also strongly opposed the proposed tax amnesty scheme of the government and, proposing action against 3.8 million tax evaders if it has data.
According to the proposed schemes, the government has fixed a limit up to Rs 5 million for both incomes and assets that can be whitened through these schemes. The government will not ask the source of income and previous tax evaders will be considered to have a clean slate as long as they are honest taxpayers in the future. The FBR has identified 3.1 million people who are evading tax of whom at least 1.3 million are expected to be brought into the tax net.
According to the reports, for up to Rs 5 million, the FBR will allow clearance of cash by paying Rs 40,000 in the first month, Rs 50,000 in the second month and Rs 70,000 in the third month. Any amount above Rs 5 million will be cleared by paying one per cent of the total amount in the first month, 1.25 per cent in the second month and 1.75 per cent in the third month.