In what can be seen as another U-turn by the Pakistan Tehreek-e-Insaf government, it has introduced a tax amnesty and new tax-declaration scheme to bring black money into the legal economy. Prime Minister Imran Khan, who while sitting in opposition was always critical of tax amnesties, had opined that they were the root cause of economic disparity. Khan maintained that amnesty schemes were meant to benefit the elite, people who earned money through corruption and used these programs to turn black money into white.
What is more notable is that Khan did not bother to get this new tax program through via parliament, but instead through the cabinet, and President Arif Alvi passed the ordinance in a hurry to avoid opposition in the National Assembly.
This is not the first time a Pakistani government has passed this kind of tax-amnesty program; governments led by the Pakistan People Party and Pakistan Muslim League-Nawaz also introduced similar programs. However, since Khan was a vocal critic of such schemes, it was expected that he would not take this route himself.
Khan’s adviser on finance, Abdul Hafeez Sheikh, was asked how this tax program is different from similar schemes introduced in the past, and all he could reply was that this time the government was not blackmailing anyone and making it mandatory for the people benefiting from this program to start filing tax returns. If Sheikh has any knowledge of the history of the Pakistani economy, and one guesses that he probably does, he could have avoided giving such a lame answer, as all the tax amnesties introduced in the past had the same motive but did not prove beneficial for the economy, nor was the proportion of tax filers increased.
Khan himself during the Pervez Musharraf era benefited from a tax amnesty and disclosed his London apartment as one of his assets. Probably now the undisclosed assets of Khan’s sister Aleema Khan too will become white and she will be cleared of the accusations of holding undisclosed assets beyond her means, but what about those who file tax returns regularly? Do these kinds of amnesties not encourage people to hold off filing income-tax returns and to hide their assets until another amnesty is introduced?
Pakistan’s problem is that the rich are becoming richer with each passing day and the poor are becoming poorer with the passage of time. The economic disparity is widening and the middle and lower classes are subject to an immense burden of indirect taxes. However, even after paying these indirect taxes, the masses are deprived of basic facilities from the state, as for everything from education to health care they have to cover the expenses on their own.
The revival of the economy will depend on political stability and the trust of global players like the US and China, which is missing at the moment
This new tax amnesty is being introduced at a time when the rupee has fallen to a historic low against the US dollar. So at a time when investors are not ready to trust the incumbent government because of political instability and the currency is left at the mercy of the speculators, who are making millions of rupees’ profit in a few hours by buying and purchasing dollars, the tax amnesty will yield no result. The revival of the economy will depend on political stability and the trust of global players like the US and China, which is missing at the moment.
The PTI government has made a mockery of itself and Pakistan by retreating from its commitments one by one. There are no more promises of providing jobs to the masses, nor is there any hype about building 5 million houses for the poor. It is quite the opposite in fact, as according to experts, by next year more people will go below the poverty line and unemployment will increase as well. Tax amnesties are of no avail in fixing the economy, which in fact needs restructuring and overhauling.
The government’s decision to increase indirect taxes and to investigate every political opponent has resulted in an atmosphere of fear, and in the world of capital and investment fear is the greatest factor in keeping investment away. There have been no concrete steps taken to boost the agriculture sector by introducing new technology, while the textile sector is also being ignored. The PTI government is solely focused on victimizing its political opponents.
So far, in fact, it is the military establishment that has been bringing in aid from friendly countries like China, Saudi Arabia and the United Arab Emirates. The establishment knows that PTI’s plans have failed miserably, and that is the reason Khan’s own team has been gradually replaced with technocrats like Hafeez Sheikh, Shabbar Zaidi and Raza Baqir. This clearly shows that the establishment is waiting for the time when the economic crisis will be over, when it will quickly replace Khan as well with a technocrat or a person of its own choice. The question, however, remains whether under the prevailing circumstances the establishment will be able to thwart the economic crisis that is leading the country toward bankruptcy.
Tax amnesties can win the establishment support from the corporate and landlord elite, but they will not solve any economic problems, as the majority of the population is facing the worst inflation in a decade. If whistleblowers are correct, then over the next month the opposition will start agitating in the street against the poor performance of the PTI government in the economic and governance domains. However, the question remains whether the opposition will be ready to take on the real culprit (the establishment) behind this mess or will only focus on getting relief against the cases many opposition members are facing in the courts.
In this war of power between the political and military elites, the common man has suffered a lot, and it is the masses who are still paying for this fight, which will do nothing to bring them a bright future and prosperity. And with the establishment still not learning the lessons from the past and still busy engineering the political discourse, while an incompetent government is focusing only on victimizing its political opponents, there is no light at the end of the tunnel for the common man in Pakistan.