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Another amnesty scheme

Another amnesty scheme

According to newspaper reports, the prime minister is weighing options to launch an amnesty scheme for the owners of the offshore companies. The step shows how the government is trying to stabilize financial affairs and bring back the black money to Pakistan from abroad. The prime minister is on the forefront to offer an amnesty scheme by persuading the well-to-do citizens to declare their assets in foreign countries. On another note, frequent changes in the rules and regulations have marred the shape of the whole taxation system. The government has discussed the issue on several occasions, but failed to reduce tax rates which could lead to the broadening of the tax base. However, the policymakers have so far failed to address fiscal challenges despite taking loans and grants from every external and internal source. The political government is giving knee-jerking response to the opposition parties which have launched a protest movement when budget for the next financial year is under process and the general elections are at hand. When it comes to the preparation of laws and schemes, it appears no one will be able to indulge in corruption, but every legal code fails at the implementation stage.

Now the prime minister wants to introduce another amnesty scheme to allow Pakistanis to declare their assets stashed in foreign banks. But there is a dire need to keep the house in order before launching such a venture. The tax-to-GDP ratio is the lowest in Pakistan as compared to other countries in the region, but tax rates are the highest than any other country. As a result, citizens are forced to pay tax on everything indirectly. There is a need to bring wealthy individuals into the tax net. Unless the government machinery is rid of the black sheep, no reform programme can change the system. There are no two opinions on the sincerity of the prime minister with regard to the amnesty scheme, but the government should also prepare the ground to attract not only local but also foreign investment. Keeping the capital simply in banks is not a business, but wastage of time and money. According to Dr Ishrat Hussain, the former State Bank governor, Indonesia materialised up to $40 billion by offering its citizens an amnesty scheme, but Hussain should understand this is Pakistan where the government itself gets involved in violates the rules of law. The scheme should be launched by developing a mechanism and not on the basis of mere statements.