Benami crackdown

With the amnesty scheme over, everyone has been waiting to hear how the federal government plans to go after those who have concealed their wealth. Once again, however, the government has sent mixed signals. On the one side, reports suggested that PM Imran Khan had directed FBR chairman Shabbar Zaidi to avoid harassing businessmen. On the other, PM Khan announced on Friday that the government would offer whistle-blowers around ten percent of the value of any benami accounts and assets recovered through their information. Neither of the proposals is the right one. Moreover, there will be more questions about the government’s objectives in its ongoing efforts to increase the tax base. The FBR says that its aim is to document the economy, rather than generate revenue. But this objective is inconsistent with the PM’s proposal to essentially convert whistle-blowers into benami bounty hunters. Such a proposal should have been shelved much earlier on in the process. To start with, it shows the tax apparatus to be weak. The new FBR chairman had done his best to show that the tax apparatus knows all. While the claim may be overstated, the proposal to offer money to whistle-blowers on benami assets shows that the tax apparatus does not know enough.

This creates two possibilities: either no one will report their benami assets in the absence of government-led action, or, the government will give birth to a culture of outing each other’s assets. The government has the right to use existing benami laws to pursue assets whose ownership has been concealed for tax evasion. There is little doubt this is a widespread practice. The FBR chairman recently said that around 30 percent of all bank accounts in the country could fall in the category. However, efforts such as the biometric verification of bank accounts constitute better practice in the name of tax reform.

What is more important is that the government needs to stop muddling its own efforts. The move to link the recovery of benami assets to the government’s poverty alleviation programme is in poor taste, much like the offer of a percentage of recovered assets to whistle-blowers. Not only that, claims that the sale of benami assets could make the Ehsaas programme higher than the federal budget do no one any favours. Promising the moon when you show little evidence of being able to deliver the earth is not good strategy. The clampdown on benami assets is the FBR’s job. It should remain that way.