Tax dodgers should be punished, not pampered with pardons - Islamabad HC
IN 02.05.2013, we had reported about the Amnesty Scheme announced by the Pakistan Government for smuggled or non-duty paid motor vehicles.
We had also reported in DDT 2136, 27.06.2013 that the President of Defense of Human Rights of Public Services Trust had filed a Petition in the Islamabad High Court against this scheme and the Court had quashed the Amnesty Scheme.
The High Court observed that the amnesty scheme is bad in law for the following reasons:-
1. It favours tax evaders and puts the honest taxpayers at a disadvantage.
2. Such schemes, announced at random, are against Article 25 of the Constitution as these violate the guarantee against arbitrary decisions under the whims and fancies of the rulers in power.
3. It favours unscrupulous taxpayers, leading to unjustified and hostile discrimination resulting in a violation of equality clause of the Constitution.
4. This scheme, amounting to approving the crimes of tax evasion, rent seeking and money laundering will have pernicious effect on the general moral fabric of society.
5. All such moves put integrity at a discount and place a premium on vulgar and ostentatious display of wealth. This shatters the faith of the common man in the dignity of honest labour and virtuous living.
6. It does not provide a level playing field for all stakeholders, especially the local automobile manufacturers to benefit from the Amnesty Scheme.
7. It promotes anti-competitive market behaviour by saturating the market with cheaper, older and high maintenance vehicles; effectively collecting long term junk and attracting the middle class to opt for such affordable cars as opposed to buying new or relatively less used and more efficient imported vehicles.
8. It creates a black/grey market for vehicles or a special deal offer to the corrupt elements of society by not only financially incentivizing but also encouraging smuggling of more and more vehicles if such Amnesty Scheme is allowed to persist.
9. It discriminates against law abiding and taxpaying citizens and discourages them from gaining confidence in the legal system, especially in the tax regime which is to be administered justly and fairly across the board.
The High Court observed that:
1. It is imperative that the tax dodgers should be punished, not pampered with pardons. If the perpetrators of law are not checked and placed in order, the impression that it does not pay to follow the rules and that there are ways to defeat the law will manifest itself in permanently detrimental ways.
2. It would appear more akin to the state settling/compromising with the tax evaders where the state is positioned with the weaker bargaining position. The failure of state institutions to apprehend the violators and subject them to the law of the land must not be an excuse to allow for amnesty schemes to prevail.
3. Corruption must be uprooted and all state agencies must be regulated, scrutinized and held strictly accountable, but such type of schemes encourage illegality in the financial sphere, by promising to turn ‘black' money into ‘white'.
4. The Amnesty Scheme is benefitting only a few influential, tax evading citizens and corrupt government officials at a time when the country requires a level playing field where the protected stakeholders are also taxed similar to the common man.
5. The Amnesty Scheme is not only a slap on the face of honest taxpayers but also aimed at decriminalizing the crime of tax evasion and plundering of national wealth.
6. If one looks at the needy economy of Pakistan, culture of corruption, budget deficit, per capita income, begging for financial assistance by all Governments and ever increasing gap between rich and poor, there is hardly any justification to import luxury vehicles that too through illegal modes and by exercising lucrative influence.
The High Court directed that:
1. All cars registered under the Amnesty Scheme must be ceased and reverted back to pre-SRO position.
2. Corrupt customs/government officials must be uprooted - and legal action by way of initiating criminal proceedings to be investigated by FIA against all Government officials including Chairman FBR involved in introducing, approving and executing Amnesty scheme.
3. A committee may be established to examine the corrupt practices and suggest a code of ethics to be strictly complied with by all Government departments, so that against the cancer of commerce i.e corruption law must strike hard at it.
4. Vehicles smuggled after announcement of scheme be confiscated forthwith and entry of those vehicles which have still not been brought to Pakistan be banned and if brought be confiscated and auctioned in according with law. All vehicles above the age of three years may also be confiscated.
5. Tighter border controls must be placed to ensure that smuggling is prevented and all violators severely punished.
6. In these peculiar condition and the economy, in future no government department be allowed to import luxury vehicles and all the departments may be directed to use the locally manufactured vehicles.