AFTER the amnesty comes the chase. The government is now ready to activate step two of its aggressive revenue effort by using the full powers of the benami law to go after those assets whose ownership has been deliberately concealed for tax evasion purposes, or worse, because they may be the proceeds of crime. The practice is widespread, to the point where in many sectors of the economy it is standard practice to declare only a portion of any transaction and conduct the rest in cash. FBR chairman Shabbar Zaidi claims up to 30pc of all bank accounts in the country could be holding benami assets, and he may well be right. This practice has thwarted all previous attempts to broaden the tax net. Not only that, the pathways that it creates for concealing the beneficial owner of any given transaction or asset are all too often used by criminal, or in some cases even terrorist, groups, to carry on business without detection. There can be little doubt that the practice needs to end, and if the government of the day feels that some recourse to harsh measures will be required for the purpose, then that is also understandable.

What is a little more difficult to understand, however, is the prime minister’s reported instructions to the FBR chairman to “not harass” the business community in the process of doing this. Perhaps the prime minister’s instructions were to apply a gentle hand in the application of this law, because otherwise it would be difficult to understand how the stated objective of the entire exercise — to promote documentation of the economy — can be pursued without including the business community in its ambit. The business community is the first and largest user of benami accounts, and without specifically including them in the exercise it would be difficult to say what exactly is the point of it all.

The danger here is that the documentation drive could get mixed up with the so-called accountability drive that is running in parallel. If the whole purpose of the aggressive moves being made against benami assets turns out to be to pursue the political opposition, then documentation and other high-sounding economic objectives will become little more than a fig leaf. Accountability is important and necessary, but it needs to be fair, and perceived as fair and evenhanded irrespective of political affiliation. Likewise, documentation efforts need to be aggressive and blind to where the benami assets are held and who is holding them. Without ending this practice, there can be no real documentation, and without documentation of assets and incomes, there can be no broadening of the tax base. Having launched the effort, it is now critical that the government keep it focused where it needs to be, and let politics and economics exist in their respective domains.

Published in Dawn, July 6th, 2019