Pakistan Economy Watch (PEW)

Encouragement of non-filers criticised: PEW

Aiding tax dodgers to boost flow of illicit money in real estate market
The decision to embolden tax cheats, not to go down well with FATF
The Pakistan Economy Watch (PEW) on Saturday said relaxation given to non-filers for purchasing property and cars has encouraged tax evaders and corrupt.
The decision will hit the efforts to broaden tax net, stop the influx of black money into real estate market, stabilise the price of plots and homes, and bring an end to the culture of premium in the auto industry, it said.
The move will not go down with the Financial Action Task Force (FATF) authorities that are due soon in the country to review the progress against money laundering and terror financing, said Dr. Murtaza Mughal, President PEW.
Talking to President of Rawalpindi Islamabad Tax Bar Association (RITBA) Syed Tauqeer Bukhari, he said that the real estate sector will again emerge as a favourite area for the corrupt who find it convenient to hide their ill-gotten money in this business.
Murtaza Mughal said that the claim of the government to facilitate non-filer to buy properties will encourage expatriates to invest in Pakistan is baseless as they already enjoy exemption under the Income Tax Ordinance.
He noted that the decision to help tax cheats to buy properties and costly vehicles indicate the growing influence of real estate mafia and auto industry milking masses since decades.
At the occasion, RITBA President Syed Tauqeer Bukhari said that a delegation of FATF is due shortly to review the situation but no purposeful action has been taken against money launderers and those involved in terror financing.
He said that recently FIA arrested some currency dealers in Peshawar to please FATF but relevant clauses were not applied and they were charged under Maintenance of Public Order which was overturned by the High Court due to the absence of any evidence.
The action of federal agency speaks a lot about the capacity and will of the officials which will never satisfy FATF and it will not add to the reputation of the country, Bukhari said.
He noted that the government’s plan to modify the relevant income tax law will not help improve the situation or help get desired results.
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Eighteenth Amendment continues to damage revenue generation: PEW

The Pakistan Economy Watch (PEW) Chairman Brig. Muhammad Aslam Khan (Retd) on Sunday said the Eighteenth Amendment of the constitution has added to confusion in the taxation system.
It has divided taxation system in an unnatural way hampering documentation of the economy, helping the undocumented economy and increasing the cost of doing business for the business community, it said.
The amendment has resulted in a unique Value Added Tax (VAT) in Pakistan in which goods are taxed by federal authorities while services are taxed by the provincial authorities resulting in confusion, said PEW Chairman Brig. Muhammad Aslam Khan (Retd).
Federal and provincial revenue authorities have their own conflicting definitions for goods and services which results in disputes, litigation and loss of revenue, he added.
He said that the VAT is collected by a single authority in all the countries except for Pakistan where the tax on services gathered by provinces some of whom are facing lack of relevant laws, human resources, paraphernalia, and ability.
The capacity constraints resulted in low tax collection which has a negative impact on the overall collection, said Brig. Muhammad Aslam.
At the occasion, Dr. Murtaza Mughal said that the orchestrators of the 18th Amendment were not concerned about the welfare of the masses.
They were concerned about politics otherwise corrective measures would have been taken after the realization of the devastating consequences of the move on dozens of the sectors.
He noted that a country can never progress without a just and sound VAT, therefore, the incumbent government must take corrective measures.

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Govt should take the country out of economic isolation: PEW

Trade with neighbours insignificant except China
Kashmir issue can be resolved through trade
The Pakistan Economy Watch (PEW) on Saturday asked the government to end country’s regional economic isolation to ensure rapid national development.
We have insignificant economic relations with India, Iran and Afghanistan while the only country with whom our trade is significant is China, it said.
Trade with Iran and Afghanistan is hostage to negative US attitude while trade with India can be increased to ten billion dollars without compromising on core issues, said Dr. Murtaza Mughal, President of the PEW.
Murtaza Mughal said that all the efforts to resolve Kashmir dispute through wars and jihad have failed and the armed conflict has no longer remained an option as both the neighbours have acquired nuclear capability.
The time has come to resolve the Kashmir issue and other disputes through trade, he said, adding that India can be included in the CPEC and gas pipeline projects which will help Pakistan generate a handsome amount of foreign exchange and normalise relations.
Trade with India will import cut import bill and provide relief to masses in shape of affordable goods and services, he said.
Both the countries have a lot in common and they can consider not to compete in the international market but to cooperate to get a larger share.
Karachi port continues to block trade due to congestion and other problems which must be tackled on a priority basis, he demanded.

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