Huzaima Bukhari & Dr. Ikramul Haq
If anything may be asserted with complete confidence, it is that governments through courtesy of the legislature undo many promises made to the public. Whereas the Constitution gives immense importance to relationship with the public, but it has been observed that in many of the jurisdictions of the world privileges are showered on the people then, when a particular occasion arises, they are suddenly snatched away, sometimes in utter violation of the supreme law of the land. This could be attributed to peculiar circumstances or need of the hour but the fact remains that for the public, relying on the promises of any government in power is day by day becoming more and more difficult. Besides promises, the governments also take full liberty with meager possessions belonging to its citizens with legislative audacity.
A peep into the past would reveal a very glaring example of legislative high-handedness that occurred in the United Kingdom. The case is that of Burmah Oil Company Ltd. v. Lord Advocate  AC 75. In 1942, during the Second World War the British forces were ordered to destroy oil fields in Burma to prevent them from falling in the hands of the advancing Japanese army. Since this destruction caused the Burmah Oil Company heavy losses, it brought an action against the UK government that turned out in its favour. However, the Court of Session overturned the decision on the government’s appeal. The Company filed an appeal in the House of Lords which held by a 3-2 majority: “Although the damage was lawful, it was the equivalent of requisitioning the property. Any act of requisition was done for the good of the public, at the expense of the individual proprietor, and for that reason, the proprietor should be compensated from public funds.” Just because the government did not want to compensate the company, it amended the War Damage Act of 1965 with retrospective effect with the sole purpose to exempting the Crown from liability in respect of damage to, or destruction of, property caused by acts lawfully done by the Crown during, or in contemplation of the outbreak of, a war in which it is engaged.
Pakistan’s story is not much different either. After the country came into existence, local and migrant investors with ample support from the governments showed great enthusiasm in setting up industries, banks and educational institutions. During the 1950 and 1960 decades, the country witnessed a rapid growth in economy with the result that those who availed the opportunity became wealthy but in some instances, at the expense of the working class.
To alleviate their sufferings, the best way out was to enact proper rules and regulations for the care, protection and wellness of the labourers but what did the first democratically elected Pakistan People’s Party government did was to introduce measures to nationalize these privately owned enterprises to redeem the ‘pledge’ of bringing about industrial reforms. The objective of “Nationalization and Economic Reforms Order” (ironically abbreviated as NERO), as explained by Dr. Mubashir Hassan, then Finance Minister that “wealth of the nation must be used for the benefit of the nation and cannot be allowed to be concentrated in the banks of a few individuals.” Undoubtedly a noble thought but delivered in the most obnoxious pattern not only breaking the back of investors but also resulting in replacing competence with incompetence by flooding the public sector with employees having no loyalty with these institutions.
The 1990s saw a shift in policies and there came another phase—privatization—which temporarily helped to lift the country out of financial crises but in the wake of these actions again, favoured people became enormously wealthy with huge loans from state owned and private banks to be flagrantly written off later while the public at large remained deprived of much smaller loans. In both circumstances, people became the real sufferers because in the earlier period of nationalization, the original owners fled the country to establish themselves abroad and during privatization, opportunists minted gold. Due to these imprudent measures the country, even after a lapse of more than forty years is struggling to free itself from economic collapse.
Clause (63) of section 2 of the Income Tax Ordinance, 2001 defines ‘tax’ as meaning any tax imposed under Chapter II and includes any penalty, fee or other charge or any sum or amount leviable or payable under this Ordinance. This implies that even super tax imposed by section 4B is also included. So, when a case to this effect was won by the taxpayer DG Khan Cement Company Ltd. v. Federal Board of Revenue etc [(2018) 118 TAX 171 (High Court, Lahore)], the legislature quickly intervened to insert an explanation in section 113 excluding this tax from being included for the purpose of computing minimum tax liability. Such are the deadly tactics of the legislature when it comes to any benefit that could be derived by the public.
From what has transpired, there seems a continuous conflict between the government and the public. Any beneficial judicial pronouncement is frustrated with legislative amendment having retrospective effect. Constitutional principles are shamelessly shattered at the altar of self-serving laws enacted by officials as opposed to elected representatives who, in their ignorance ratify them to be used against the very people who brought them into power. One such move happens to be extortion of income tax from those who are by law not required to either file income tax returns or pay such tax under Article 4(c) that clearly states that no person would be compelled to do what the law does not require him to do.
In the recent amendments in Income Tax Ordinance, 2001 brought about by the Finance Act, 2019 earlier term of ‘non-filer’ has been replaced with ‘not on the active taxpayers’ list (ATL)’ that pertains to a person who does not file his income tax return for a tax year. Wherever any tax is to be withheld, the withholding tax agent is supposed to deduct double the amount where a person’s name is not appearing on the official ATL. An interesting scenario could be considered where an individual having annual income of less than Rupees four hundred thousand a year opens a savings account on the behest of his brother working abroad and wanting to send home remittances. As the balance in the account grows and profits are credited, tax withheld would be double the rate even though neither the account holder nor the non-resident Pakistani is legally supposed to file return or pay tax.
One wonders about the rationality of such provisions in the light of the Constitution, all because the incompetent and unprofessional public sector institutes are devoid of the ability to earn the much-needed revenue for the governments in power. For the sake of their jobs, and to meet illogically set revenue targets, these public functionaries are willing to jeopardize public confidence and render false, promises of the elected governments to provide for the poorer masses of this country.
The writers, lawyers and partners in Huzaima, Ikram & Ijaz, are Adjunct Faculty at Lahore University of Management Sciences (LUMS)