The tax amnesty scheme announced by the prime minister and effected through a presidential ordinance is a subject of heated debate. The critique is valid on many counts: one, it is the eighth or tenth such amnesty scheme this country has seen in its checkered history; two, the utility and efficacy of the earlier schemes is so suspect that another scheme appears totally unwarranted; three, any amnesty scheme points at the near failure of the regular tax collection mechanism in the country. It is true that the reform of the Federal Board of Revenue (FBR), the institution responsible for tax collection, is an ongoing subject of discussion and the tax to GDP ratio remains abysmally low, as do the total number of tax payers in the country. On their part, the governments resort to amnesty schemes as a short-term solution. Even though this is the third such scheme by the current government — the earlier ones came in 2013 and 2016 without any credible results — this time again, the government aims to not just raise the revenues but broaden the tax base and document the as yet undocumented economy. This time, additionally, the scheme is said to be even more politically motivated, coming so close to the general election. By increasing the ceiling of taxable income, a huge number of tax payers who are now virtually exempted and can potentially become PML-N voters. The other salient feature of the scheme is to convince Pakistanis to declare their undeclared assets abroad and fill the state coffers, without asking them too many questions.
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In our Special Report today, we at The News on Sunday have not just focused on the current scheme and what good or bad results it is likely to yield. Instead we have concerned ourselves with the larger issue of tax reform to see where does an amnesty scheme like this fit into that larger issue. At least three credible economists have raised very valid concerns that need to be heard with a lot of care.