Corruption is the disease almost every country in the world is suffering from, one way or the other. But developing countries like Pakistan happen to be the most affected by this evil. Non-filing of tax or under-statement of one’s income is one of the many forms of corruption.
Recently, Prime Minister Nawaz Sharif introduced a new tax amnesty scheme according to which non-taxpayers will be given a chance to whiten their black money or the income, they have not disclosed to the government, into legal money by paying a minimum tax of 1% of amount.
Before this announcement, Pakistan tax regime was complicated and lacked any tax amnesty for the filers. Prime Minister Nawaz Sharif has named his new tax amnesty scheme as “Voluntary Tax Compliance Scheme.” The amnesty scheme has been designed for non-filers of income tax returns as well as those who file the returns but avoid mentioning the exact amount of their income in order to avoid taxes.
Nawaz Sharif said that the government has taken steps to eradicate all the issues Pakistan has been facing and we’re heading to a better and successful future. He further said that, as a result of decisions taken by federal government, the situation of the country is much better than it was in the past years.
According to the proposal, the traders who file income tax returns will be allowed to revise previously filed returns in order to declare their hidden incomes. They are required to pay a 10% higher tax than the tax paid according to the original return. In case of hidden non-taxed income, the filers will be able to declare the income by paying 1% nominal income tax.
This way, the Prime Minister offered the non-filers of tax an opportunity to enter the tax net. With the help of this scheme, traders will get a chance to legalize their black money up to Rs.50 million worth of hidden working capital by paying 1% of the declared amount in tax. They will not be questioned about where the amount came from, no legal charges against the guilty and corrupt traders. All they have to do is declare their amount by paying 1% tax over it which is a very small rate if you ask me. It feels more like, you’re allowed do whatever you want; earn from whichever means you adopt as long as you’re paying tax. However in 2016, the non-filing traders will have to declare three times more turnover than the one declared for availing of the scheme.
In case the turnover (profit) is not more than Rs.50 million the traders will pay 0.2% tax and when the turnover (profit) is more than Rs.50 million but less than Rs.250 million, they will pay Rs.100000 plus 0.15% of the access amount the traders will pay Rs.400000 plus 0.1%.
One more thing, this scheme is not limited to the non-filers or the ones understating their incomes. Tax filers are also welcomed to apply for this scheme. But, there is one condition i.e. the tax filers can only get benefit from this scheme if they agree to pay 25% more tax in 2015 than the amount paid in 2014. Turnover tax should not be less than Rs.30000 in order to qualify for the scheme.
The Prime Minister, however, has highly praised the decision of well-established debate between the government and the different traders over the issue of taxation. He said, “The stakeholders, who took a part in this matter, deserve appreciation.”
The Prime Minister Nawaz Sharif expects positive results out of this tax amnesty scheme. He said that the pleasant impression developed might help take the country forward to a better position and place it on the road to progress and prosperity. With the non-filers coming out to claim their black money at such a small rate of tax, the government will be able to solve all the grave issues of the state one by one, for example, poverty could be be ended, employment opportunities could be created and more and more efforts could be made to get rid of terrorism. Chances are, this scheme might help improve our economy which could end up in peace all over the country especially in Karachi; the nerve centre of Pakistan. But all this can be done only if the government and trader join hands to take Pakistan to the height of glory and progress.
PM also said that there is need to make progress in all the sectors whether it is load shedding of electricity and natural gas, railways, poor economy or relations with India and Afghanistan. Pakistan’s current government is trade friendly to a great extent. It has made a lot of efforts for the growth and progress of our country at individual as well as aggregate levels.
Even the small traders who strongly opposed 0.6 percent withholding tax on bank transactions have welcomed this scheme. This might be a good scheme for the trade sector and it might improve our economy as well.
But I don’t think it’s a good idea. I mean, this is unfair. Instead of punishing the traders guilty of earning black money and hiding it from the tax authorities, the government itself is giving them incentive, a safe way out of their misery. This feels more like a protection blanket that saves you from getting punished. All they have to do is pay 1% tax in order to claim their black money and legalize it. What is one percent to a man whose black money amounts to millions or even more!