KARACHI: Business community and industry leaders reacted with a mixture of cautious optimism and disappointment at the new tax measures announced by Prime Minister Shahid Khaqan Abbasi on Thursday.

The Overseas Investors Chamber of Commerce and Industry (OICCI) was disappointed, while the Federa­tion of Pakistan Chambers of Commerce and Industry (FPCCI) allowed a note of optimism.

“We had written a letter to the government saying in principle we disagree with an amnesty,” said Abdul Aleem, Secretary General of the OICCI. “We have been paying taxes all along, and here in this one amnesty you clean those who have not been paying.”

He pointed out that OICCI members contribute one third of the total tax revenue collected by the government, and they are unlikely to be the beneficiaries of a scheme like this. Regarding the cut in income tax rates, he said it was a “puzzling move.”

“Why did they announce it today? What is its relationship with the amnesty? The timing does not make sense.”

Read: At fag end of govt term, PM offers tax amnesty

Shakeel Ahmed Dhingra, who heads the FBR Committee at the FPCCI, said the amnesty is a good idea, but the conditions attached to it are too severe. “Property seizure rule will dissuade people from investing,” he told Dawn. The option to declare foreign assets and cash holdings is a good move, he said, “but businessmen do not keep currency abroad, they keep it in fixed assets or invest in financial instruments which take time to liquidate. Will the scheme give them the time they need?” He thought the scheme will definitely attract some takers, “but not to the expectations of the government”.

Property market players had a more complex take. For example, Muhammad Hassan Bakshi, Convenor of the FBR Committee for the Association of Builders and Developers told Dawn that the scheme is necessary, but needs to be harmonised with provincial and town taxes before it will have a meaningful impact. “Powers of preemption of property were written first by us,” he said, adding that the government has cherry-picked from the list.

Other than the tax imposed by the federal government, he said provincial governments charge 7 per cent on property transactions, as well as a Town Tax imposed by local bodies.

Analysis: An amnesty for all

“If a person declares the full value of their property transaction to the government, the provincial and town taxes will both go up sharply, as well as the mutation charges. These have to be part of the incentive to declare the full value as well, with the total tax liability between them all not being more than 2.5pc. Only then will the real values of property transactions be revealed.”

Several leaders of the All Pakistan Textile Mills Association (Aptma), when reached by Dawn, refused to give a comment. However, Senator Mohsin Aziz of the PTI, who has served as Chairman Aptma in 2011 and served on the boards of several large companies, said it is a scheme to “whiten black money and discourage the real taxpayer”.

In his opinion, the worst part of the scheme is that allows people to declare hidden assets abroad without having to bring them back. “Are we really that bankrupt, that we have to play for crumbs like this?”

Published in Dawn, April 6th, 2018