For a while, the government has been mulling over a new amnesty scheme for Pakistanis holding assets abroad to encourage them to declare/bring back their wealth and get it legalised on payment of a nominal tax, replenishing the country's fast dwindling foreign exchange reserves. According to a press report, the FBR has now prepared a draft proposal suggesting three to five percent tax. The scheme is to be fine-tuned at a meeting chaired by Prime Minister Shahid Khaqan Abbasi in the first half of January. How much stolen, criminally acquired or tax evaded wealth is parked abroad is a matter of conjecture. An idea, nonetheless, can be had from what Finance Minister Ishaq Dar told the National Assembly in May 2014 in a written reply to a legislator's question. He quoted one of the directors of Credit Suisse AG as saying on record that $90 billion worth of Pakistani capital was deposited only in his bank. And further that a former Swiss foreign minister, Micheline Calmy-Rey, "is reported to have put the amount of Pakistani money hidden in Switzerland at $200 billion-a statement that was never contradicted." Switzerland, of course, is not the only place where tax-evaded or tainted wealth is parked.

Notably, five or six such schemes announced in the past proved to be damp squibs. This time though could be different. The Panama and the Paradise Papers revelations have generated worldwide furor, raising questions about the elite hiding tax evaded or ill-gotten money in offshore companies. At home, former prime minister Nawaz Sharif and his family as well as PTI's former secretary general, Jehangir Tareen, have faced legal consequences in the Panama Papers-related cases, and demands are growing for an across-the-board accountability of all those whose names have appeared in those scandalous leaks. Pakistan has also signed the OECD's convention on Mutual Administrative Assistance in Tax Matters, which is expected to come into force in early 2018. That will, hopefully, help the government to access information about bank accounts and other assets held by Pakistanis in member countries. It is unclear though if the convention's provision that allows governments to exclude certain information has been used, letting some of the assets stay hidden.

A pertinent question that merits attention is, why focus only on foreign assets and not domestic ones too? In this country of 207,774,520 only about a million file their tax returns. Most of the power elite either remain outside the tax net or pay nominal amounts.

It is, however, imperative that the amnesty scheme should be legislated as a separate piece of legislation that would need to be passed by both houses of parliament as against being a part of the Finance Bill. Furthermore, it should provide protection to the people availing this scheme from the provisions of NAB, FIA, Income Tax and all other laws for the time being enforce with a clear proviso that it does not offer any protection whatsoever to proceeds of crime. It is essential to make a distinction between 'Tax Evaded' assets and assets made from 'Proceeds of Crime'. There are swirling pools of dirty money gained from graft, kickbacks, and other crimes such as drug trafficking, extortion, land grabbing, and kidnapping for ransom. To ensure that this is done, it would be necessary to exclude all individuals, their spouses and dependent children that draw their salaries from the exchequer, functionaries of statutory bodies, employees of public sector enterprises and all elected or appointed persons in public service from the scope of this amnesty.

The effort should not only be to incentivize people to declare all their assets but also to clean up the Augean stables at home.

Copyright Business Recorder, 2018