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Black money swells to Rs 1,500 billion

RECORDER REPORT

FAISALABAD: Black money in Pakistan has swollen to Rs 1,500 billion which is swarming at the alarming rate of 22.93 percent per annum.

This was disclosed in a seminar on 'Tax Amnesty Scheme 2000' organised by the Faisalabad Chamber of Commerce and Industry (FCCI), Income Tax Department and Institute of Chartered Accountants (FCA) Faisalabad here on Sunday.

Shariq Mehmood, Central Regional Commissioner Income Tax/Wealth Tax Multan was the chief guest, while FCCI President Sheikh Mohammad Khalid Habib, presided over the seminar.

Shariq Mehmood said the CBR has appointed liaison officers in each zone who are responsible of facilitating the traders and industrialists. He said that revenue is badly needed for national development and asked the traders and industrialists to fully avail from this scheme and file their returns before April 30. To a question he said that recommendations to fix rate of foreign exchange under this scheme have already been submitted to the CBR.

FCA President Suleman Zahid Jameel said that high rate of taxes and lack of confidence among tax collectors and taxpayers is encouraging the black money.

Additional Commissioner Information Technology Shoukat Ali Sheikh, explained in detail the new tax amnesty scheme introduced by the government and said that this scheme has been evolved in best interest of the country. It aimed to discourage black money and attract maximum investment to generate economic activities in the country.

Presenting alarming figures about underground economy, he said that the black money circulating, within the country was estimated at Rs 16.96 billion in 1972, which jumped to Rs 1,491.109 billion in 1996 with an average growth rate of 22.93 percent. He said that it was one of the root causes hampering the process of development, progress and prosperity of the country.

He disclosed that according to the statistics, taxes amounting to Rs 202.561 billion were evaded in 1996 while the calculated rate of tax evasion is more than 58 percent. He said that the objective of the scheme is to control high rate of inflation by eliminating black money or underground economy.

Under this scheme on the payment of only 10 percent additional tax investors can save themselves from taxes and fines for a period of five years.

Talking about the benefits of the scheme, he said that wealth tax rate ranges from 0.5 to 2.5 percent of the value of taxable assets. By paying 10 percent tax and getting immunity from tax and penalties for the past years, this year 1999-2000 and next 5 years in wealth tax, itself is a big benefit.

Once untaxed income and assets are declared, the declarant can make full use of such asset and has immunity from penalties under income tax and wealth tax laws thereof. Peace of mind and service to the nation, he added.

Hamad Masood, General Secretary Institute of Chartered Accountants, Faisalabad and Chairman FCCI Budget & Proposal Committee termed it an unrealistic and was doubtful of its success. He said that this scheme is not being properly introduced while the clause of scrutiny of the cases filed under this scheme even after 5 years is yet another factor responsible of its inadmissible, among the business community.

He stressed immediate necessary measure to promote confidence among tax collectors and tax payers and demanded extension in date from April, 30, to June, 30, 2000 for filing returns.

He said that government has already closed various avenues of whitening of black money and provide an opportunity through amnesty scheme to declare undisclosed income. This scheme will be followed by conducting of survey by the CBR to broaden the tax base. The Army will also be used for this survey. This scheme is perhaps the final opportunity of whitening of untaxed income, he added.

He observed that the chances of success of the scheme in its present form are not very bright and some provisions of the scheme will have to be rationalised.

Talking about Clause 2, he said that there are number of words used in the scheme like deficiencies, mistakes omission preliminary examination etc., which may be interpreted in the different manners thus, creating confusion in the minds of the declarants. A definition clause may be incorporated in the scheme and such words of special significance in the scheme may be defined in this clause, he suggested.

He said that the scheme was first announced in December 1999 and the date for filing declarations was announced at March 31, 1999. However the scheme is launched on 1st of March, 2000 with the delay of about three and a half-month and the last date of benefiting from this scheme is extended by one month to April 30, 2000.

So far the scheme has not been properly publicized through print and electronic media, therefore the scheme so far could not attract much public interest. He said that the time provided for filing of declaration is very short. CBR should immediately extend the time upto September 30, 2000 and launch an effective media campaign. Extension in time for filing of declaration is also recommended in view of the proposed structural charges in tax laws before budget 2000-2001, he explained. He mentioned that Federal Finance Minister Shoukat Aziz in his recent visit to Faisalabad has said that Government is contemplating to minimize the number of taxes at Federal and provincial levels and under the new system only three main taxes i.e., income tax, sales tax and customs duty would remain intact from the financial year of 2000-2001. However the provisions of this scheme indicate that wealth tax is going to stay for the next five years.