Pakistan’s History of Tax Amnesty and World Countries
Did Imran Khan’s Amnesty scheme has brought fruits?
Let’s Examine this through the glimpse of Pakistan’s history amnesty schemes and in comparison, with the world.
Instead of its initial sunset date of June 30, 2019, the Government officially announced the interim final date of the Asset declaration scheme 2019 to 3. July.
According to this system, national and foreign resources (not including actual property) may be whitened after a cost of 4% only, in contrast to a tax of 45 per cent in India.
It is unfortunate that the state of Pakistan, Tehreek-e-Insaaf, has thus followed in the line of its predecessors, who had come up with such schemes, instead of making strong law to return stolen cash from Swiss banks.
A brief peek into the past money-whitening schemes in Pakistan:
- Gen Ayyub Khan brought first tax amnesty scheme in 1958 which brought approximately 71,000 declarations, 266,183 taxpayers, contributed a total of Rs1.12 billion to the kitty. But tax collection remained less than 10 per cent of the total GDP in 1958-59.
- In 1997 over Rs142 million was collected through the tax amnesty scheme.
- The year 2000 under General Musharraf, approximately 79,200 declarations were filed, bringing in Rs 10 billion to the exchequer.
- In 2001, a tax amnesty scheme called 'Investment Tax on Income. The effort proved futile as only Rs 2.5 billion was received.
- During 2008- 2012, in people’s party regime all kinds of concessions were dished out to tax evaders during May and June 2012 to achieve the time's budget target of Rs1,952 billion. The target was missed by over Rs70 billion though.
- In 2013, the Pakistan Muslim League-Nawaz government had announced a money-whitening scheme, dealing only with assets held within the country.
- The 2016 scheme saw just 10,000 declarations, contributed only Rs0.85 billion on December 1, 2016, for the real estate sector.
- In April 2018 by June 30, nearly 5,000 people in Pakistan had filed returns declaring their foreign assets and deposited approximately Rs80 billion in taxes.
Research shows that many nations have in the past initiated such money-whitening systems and reaped profitable economic dividends.
The list of the countries is followed:
In October 2016, the Indian tax amnesty had drawn $9.8billion in asset declarations.
Finance Minister Arun Jaitley informed journalists that the system had reported assets valued at Rs 652,5 billion ($9.8 billion), which meant a rise to government revenues of Rs 294 billion. The amnesty resulted in 64,275 declarations, with an average of Rs 10,2million reported. The initiative came in 1997 following a comparable initiative that generated Rs97.6million of revenues. There have been more than 15 systems for whitening black money in India up to now.
Numerous American states have had tax amnesties.
In its 2009 tax amnesty program, Los Angeles had gathered $18.6 million, raised $8.6 million, and saved $6.7 million in fines for companies. In its 2009 tax amnesty program, the state of Louisiana contributed $450 million, three times as much as was anticipated.
On 26 June 2012, the U.S. Internal Revenue Service (IRS), a national tax review body, reported that its voluntary overseas disclosure programs raised more than $5 billion from 33 000 volunteer disclosures produced in the two first programs in back taxes, interest and fines.
In Canada, a tax amnesty scheme called the "Voluntary Disclosure Programme" already exists for income tax and Excise related offences.
In Belgium, the Legislative House of the country adopted a law during 2004 which allowed individuals with the taxation of Belgium to regularize the assets held in Belgium before 1 June 2003, whether they were undeclared or not.
Germany also declared a tax amnesty for tax evasion in 2004.
In March 2017, Indonesia, the largest Islamic country, netted some US$ 9.61 billion. In 1964, 1984 and 2008 the incentives were also granted.
A tax amnesty and amendment to the Taxation Act in 2003 was introduced by South Africa.
A tax evasion amnesty for unreported property or concealed ones from tax haven was announced in 2012 by the Spanish government.
In 2001, Italy implemented tax amnesty for the first time. In 2009 the amnesty for Italian taxes imposed a flat fee on the repatriated property of 5% and managed to increase the volume enormously. Approximately € 80 billion of the property was proclaimed, resulting in 4 billion Euros of tax revenue. The Bank of Italy had projected that some 500 billion euros are undeclared assets and had been kept abroad by Italian citizens.
In 2007, $130 million in the first six months of the Russian Tax Amnesty Program was gathered.
On 30 September 2010, by saving just 55 per cent of exceptional loans, the state of Greece given tax relief to millions of Greek people.
In 2014, the Tax Amnesty of Australia (ATO) netted billions but probes were not shelved against wealthy Swiss confidential accounts.
Around 1750 Australians have reported a combined $240 million worth of revenues and $1.7 billion worth of amnesty resources and another 800 anticipated to volunteer disclosures," according to the 2014 "Sydney Morning Herald," 2014. Income $120 million in investments retained in Liechtenstein and Switzerland was the largest disclosure by taxpayers in $30 million. The lowest was a $10,000 disclosure. Only 130 people produced estate declarations. The vast bulk of voluntary divulgations linked to income and shares.
In the United Kingdom (299 disclosures), Israel (231 disclosures), Singapore (123 disclosures), Hong Kong (115 disclosures) and Liechtenstein (43 disclosures) demonstrated to be the most common destinations for undeclared riches.
So, to conclude, we have made comparison with Pakistan’s past and with other countries to show that it's not about only PTI who had been drastically failed to produce the net evaders on account rather the world riches had been doing that, the biggest example before is England itself. But they are civilized countries with a strong economy. Pakistan has been deteriorated on economic front from different eras.
The people of Pakistan need to be dealt with a stick. The looters must be brought to justice with implementing strong legislation so the followers may be aware of doing such an act. It's not only the responsibility of Imran Khan rather that every individual’s obligation.