New NRO coming for tax dodgers, Senate committee warned

ISLAMABAD: Chairman Federal Board of Revenue (FBR) Ali Arshad Hakeem on Friday disclosed that numerous NROs had been given in tax laws, through exemptions and SROs, to benefit the rich and influentials and the chairman of the Senate Standing Committee on Finance and Revenue said another big NRO was coming under the tax amnesty scheme. These bold and blunt statements were made in a meeting of the standing committee which met here under the chairmanship of MQM Senator Nasreen Jalil.
After the senators’ stiff resistance to an amendment bill for approving the tax amnesty scheme, Hakeem said different tax exemptions and discretionary SROs (Statutory Regulatory Orders) in the existing tax laws were financial NROs meant for the rich and nothing was available in laws to benefit the poor. The committee recommended that the bureau give specific amendments to the law to approve the amnesty scheme, as they will not allow blank powers to the tax machinery.

Nasreen Jalil said an attempt was made to bring the National Reconciliation Ordinance (NRO) under the name of Tax Laws (Amendments) Bill 2012. The aim of introducing the bill was to whiten the black money earned through illegal means, she said, adding that poor people were paying their taxes and rich classes were allowed to whiten their black money under the guise of amnesty scheme.

Hakeem said they had identified 2.9 million tax-evaders of which 0.2 million were big fish who would not be allowed to benefit from this amnesty scheme. “On the basis of their massive expenditures, these 0.2 million potential evaders will be served with tax notices,” he added. He said the bureau was working to calculate the exact cost for different tax exemptions and SROs and would recommend the Ministry of Finance to abolish such incentives meant to benefit only the rich segments of the society.

Reviewing the FBR’s Tax Registration Enforcement Initiative 2012 (TREI 2012) and Investment Tax Scheme 2012, the chairman of the committee declared that the proposed amendment bill was a violation of Article 73 and Article 25 of the Constitution and directed the FBR to specifically make the tax registration scheme as part of the bill.

The FBR agreed to the proposal of senators and now specific amendments to the scheme will be made part of the bill.

Opposing the bill, Senator Ishaq Dar said the NA Speaker would have to decide whether this was a money bill or not and declared that it was supra law and would be rejected by parliament. He proposed that the committee should recommend the Upper House to reject this law in its existing form, as anyone would challenge it in the court after 48 hours of its approval from parliament.

Senator Haji Adeel said this tax amnesty would discourage the honest taxpayers.

Senator Hamayun Khan Mandokhel also expressed concern over the tax amnesty scheme and said that the FBR had other options to broaden the tax base as it had the data to identify tax-evaders.

Earlier, in her remarks Nasreen Jalil said that the tax amnesty scheme was like an NRO that would whiten the black money by paying a certain amount of tax. The law would be immediately challenged in courts, she added.

She said the Tax Laws (Amendments) Bill 2012 could not be passed in its existing form, as blanket powers could not be granted to the FBR in the name of national interest.

“The FBR should present a specific scheme without giving blanket powers to introduce any kind of amnesty or registration schemes. Instead of blanket powers, the FBR should come up with a specific scheme. The FBR should give a comparative study of the previous amnesty schemes vis-à-vis new TREI-2012) and Investment Tax Scheme 2012.”

The senators argued that the overriding provisions of the Bill had made it more controversial and it was not possible to pass it in its present form. They said there’s also a violation of Article 25 of the Constitution. Article 25 is related to the equality of citizens under which all citizens are equal before law and are entitled to equal protection of law and there shall be no discrimination on the basis of sex.

There was a debate among the committee members whether Tax Laws (Amendments) Bill 2012 was a Money Bill or not. At the start of the meeting, Minister of State for Finance Saleem Mandviwalla insisted that it was not a Money Bill but an amendment Bill.

When Chief Inland Revenue Policy Dr Muhammad Iqbal informed the committee about the legal aspects of the Bill as per the Constitution, the committee endorsed the viewpoint of FBR chief that it was a money bill. Later on, Saleem Mandviwalla also agreed that it was a money bill and assured that the desired changes in the bill would be made to incorporate the recommendations of the committee.

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