Dr. Ikramul Haq
A search at the website of Federal Board of Revenue (FBR) reveals that the last tax directory published for parliamentarians was for tax year 2019 and for all taxpayers for tax year 2018. There is no formal explanation available for this discontinuation but according to an informal one, sharing of data and its analysis by experts has been causing “embarrassment” for the apex revenue authority of the country. It is shocking, to say the least! We are living in an era where sharing information of public importance by governments has become integral to good governance and accountability.
Article 19A of the Constitution of Islamic Republic of Pakistan [‘Constitution’] bestows on the citizens a fundamental right to information saying: “Every citizen shall have the right to have access to information in all matters of public importance subject to regulation and reasonable restrictions imposed by law”. It is, thus, mandatory for FBR as it did in the past, to share with the people of Pakistan information/data, which is of public importance.
It is a painful fact that the coalition government of Pakistan Tehreek-i-Insaf (PTI) during its tenure from August 18, 2018 to April 9, 2022 failed to publish tax directories for tax years 2020 to 2021 elusively for parliamentarians and from tax year 2019 to 2021 for all taxpayers. The alliance government of Pakistan Democratic Movement (PDM) after assuming power on April 10, 2022 also did not bother to publish the same for tax year 2022 that became due during its tenure.
This tradition that was set during the government of Pakistan Muslim League (Nawaz) [PMLN] from 2013-18, under now fourth-time Federal Finance Minister of Pakistan, Muhammad Ishaq Dar, had continued, the latest tax directory for tax year 2022 should have been on FBR’s website by the end of February 2023 along with other pending ones.
It may be recalled that publication of the tax directories became an annual feature by FBR after clamor over the issue of meagre income tax payments by elected parliamentarians and the rich and mighty in Pakistan. This was also highlighted in a series of columns, coauthored by this scribe with his spouse, Tax delinquents, January 4, 2013, Allying with tax evaders, January 25, 2013 and ‘Tax Directory for all’ January 10, 2014.
In Tax Directory for all, it was specifically demanded: “…FBR should be authorised by the federal government to publish annual tax directory (it was done only in 1993 and 1994). This step will not only expose the rich and mighty who have amassed wealth, have failed to pay taxes under the law, but will also help to promote the much-needed tax culture”.
In the wake of above, the then PMLN government published tax directories of parliamentarians and for all taxpayers for tax year 2013 on February 28, 2014 and for tax year 2014 on June 15, 2014, many months after publication of the above articles. Afterwards, it became a regular practice for PMLN government to publish these tax directories within reasonable time until 2018. However, during its rule from August 18, 2018 to August 9, 2022, the PTI government discontinued the tradition by delaying the publication, and until the success of vote of no confidence on April 10, 2022, published only two directories.
Tax directories of parliamentarians from tax year 2013 to 2019 and all other taxpayers from tax year 2013 to 2018 are available at the website of FBR [https://www.fbr.gov.pk/Categ/income-tax-directory/742].
It is time that the PDM government should inquire from Chairman FBR as to why the PTI government deferred/delayed publication of tax directories. It should also tell the public what has been preventing publication of the pending tax directories after assuming power on August 10, 2022.
Tax returns for tax year 2018 became due after PTI came into power on August 18, 2018. Delay in publishing tax directories was due to extension given by the PTI Government in filing of returns and not by the PMLN government.
On May 18, 2018, the National Assembly passed Finance Act, 2018. It contained two laws relating to asset-whitening, namely, Foreign Assets (Declaration and Repatriation) Act, 2018 and Voluntary Declaration of Domestic Assets Act, 2018,with the assurance of“complete confidentiality”. They offered secrecy, notrevealing the names of beneficiaries that included even public officeholders in service prior to 10 years of commencement of these laws, and no probe to the extent of assets declared under these laws.
Both the laws, patently against Article 19A of the Constitution became effective after receiving the assent of President on May 22, 2018.
The PMLN government through the above laws even decriminalized financial crimes committed against the State by public officeholders after ten years of ceasing to hold their offices! These laws were also patently unconstitutional, passed as Money Bill, in utter violation of judgement of the Supreme Court of Pakistan in Workers Welfare Funds m/o Human Resources Development, Islamabad through Secretary and others v East Pakistan Chrome Tannery (Pvt.) Ltd through its GM (Finance), Lahore etc. and others [(2016) 114 TAX 385 (S.C. Pak.)].
These laws also could not override the National Accountability Bureau Ordinance, 1999 (NAB Ordinance) that applies from January 1, 1985, being special law overrides any such laws as held by Supreme Court of Pakistan in Amjad Qadoos v Chairman Accountability Bureau (NAB) Islamabad & Others 2014 SCMR 1567.
PMLN, ending its tenure on May 31, 2018, was very keen to pass asset-whitening laws when only fifteen days were left in power. Through 82,889 declarations, both these schemes fetched only Rs. 124 billion (domestic Rs. 77 billion and foreign Rs. 47 billion), though then Adviser to Prime Minister on Revenue, Haroon Akhtar Khan, claimed that collection would not be less than US$ 5 billion for foreign assets alone.
In the Finance Act, 2019, the PTI government, despite tall claims against tax amnesties, also passed Asset Declaration Act, 2019, earlier promulgated on May 15, 2019 as Asset Declaration Ordinance, 2019. It followed the same definition of “public officeholders” as contained in laws passed unconstitutionally by National Assembly under the PMLN Government through Finance Act, 2018.
The Asset Declaration Act, 2019 covered undisclosed assets, held in Pakistan and abroad, acquired up to June 30, 2018 or expenditure incurred or benami assets held, or undisclosed sales. The date of compliance was June 30, 2019. About 56 people, whose data was shared under Tax Information Exchange Agreements (TIEAs), initiative of Organisation for Economic Co-operation and Development (OECD), availed PTI’s tax amnesty scheme and declared Rs. 31.8 billion worth of assets. They paid only Rs. 1.7 billion and got a relief of Rs. 20.6 billion.
Tax returns received and amount paid under the above scheme should be appearing in Tax Directory 2018 as FBR conceded in Directory Analysis for Tax Year 2018 that the deadline was September 14, 2020 for all returns received for tax year 2018.
The PDM Government must tell the nation whether any public officeholder availed the benefit of above laws and whether their names were included in ‘Parliamentarians’ Tax Directory for Tax Year 2018’ and ‘Tax Directory of all Taxpayers for Tax Year 2018 or not.
Besides, concealing the name of public officeholders, another possible reason for PTI government of not publishing tax directories for tax year 2019 and 2020 might be to hide its failure on the revenue front. The target assigned to FBR for fiscal year 2018-19 was Rs. 4435 billion, which was revised downwards twice [first to Rs. 4398 billion and then to Rs. 4150 billion].
According to FBR Year Book 2018-19, FBR collected Rs. 3828.5 billion that was “0.4% lesser than the collection of previous fiscal year”. This pushed the fiscal deficit to record 8.9% of GDP (Rs. 3.45 trillion). For fiscal year 2019-20, it was reduced to 8.1% of GDP (Rs. 3.37 trillion) by blocking refunds of Rs. 710 billion. The PTI government during its first two years in power incurred tax expenditure cost of Rs. 2.12 trillion [Analysing ‘tax expenditure].
The PTI Government published ‘Parliamentarians Tax Directory for the year ending 30 June 2017’and ‘Tax Directory for the year ending 30 June 2017’ as late as on February 22, 2019(these were tabulated from returns filed manually and electronically till February 21, 2019 for tax year 2017).
The PTI Government could have released directories for tax year 2017 and 2018 simultaneously, but it delayed tax directories for 2018 until September 18, 2020 to show “impressive” performance by taking into account returns filed up to September 14, 2020 for tax year 2018. These facts shed some light onwhy the PTI Government was not publishing tax directories for tax years 2019 and 2020, which are now long overdue.
Tax directories for tax year 2021 of parliamentarians and all other taxpayers were also due in February 2022 but not published by the PTI government. After regime change in April 2022, the PDM government also failed to take note of all the pending tax directories.
For tax year 2022, it is the duty of PDM government to publish tax directories for parliamentarians and all taxpayers. FBR should also insert a column in these directories to show how many legislators and others paid capital value tax on foreign assets levied through Finance Act, 2022 for tax year 2022 onwards. One expects that fourth-time Finance Minister Ishaq Dar will take personal interest in publishing all the pending tax directories without wasting any further time as he takes credit of starting this practice way back in 2014.
The writer, Advocate Supreme Court, is Adjunct Faculty at Lahore University of Management Sciences (LUMS), member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE)