Tax­ing se­crecy

The Pak Banker - - 4EDITORIAL - Dr Ikra­mul Haq

TAX dec­la­ra­tions of hold­ers of pub­lic of­fice - in fact all tax­pay­ers - do not en­joy ‘con­fi­den­tial­ity’ and ‘se­crecy’. Dec­la­ra­tions have to be pro­vided by the Fed­eral Board of Rev­enue (FBR) as and when re­quired by the Elec­tion Com­mis­sion, the State Bank, the Na­tional Accountability Bureau (NAB), the Anti-Nar­cotics Force and the Fed­eral In­ves­ti­ga­tion Agency (FIA) in re­spect of any in­quiry con­ducted by them.

There ex­ists con­fu­sion and mis­con­cep­tion in cer­tain cir­cles that the In­come Tax Or­di­nance, 2001, guar­an­tees “com­plete con­fi­den­tial­ity” for tax dec­la­ra­tions as well as the doc­u­ments filed and that tax of­fi­cials can­not di­vulge their de­tails un­der any cir­cum­stances. The cor­rect po­si­tion is that the FBR can even pub­lish tax dec­la­ra­tions of all tax­pay­ers with the ap­proval of the fed­eral government - though it was done only once in 1993 and there­after the prac­tice was dis­con­tin­ued to pro­tect the rich and pow­er­ful tax evaders.

Sec­tion 216(1) of the In­come Tax Or­di­nance, 2001 says that all par­tic­u­lars con­tained in any state­ment made, re­turn fur­nished, or ac­counts or doc­u­ments pro­duced or any ev­i­dence given, or af­fi­davit or de­po­si­tion made, in the course of any pro­ceed­ings un­der this law or any record of any as­sess­ment pro­ceed­ings or any pro­ceed­ings re­lated to re­cov­ery of a de­mand shall be con­fi­den­tial and no pub­lic ser­vant save as pro­vided in the or­di­nance may dis­close any such par­tic­u­lars.

There are many ex­cep­tions to this rule as con­tained in sub­sec­tions (3), (4) and (5) of Sec­tion 216. For ex­am­ple, it is clearly pro­vided in sub­sec­tion (5) that noth­ing con­tained in sub­sec­tion (1) of Sec­tion 216 shall pre­vent the board from pub­lish­ing, with the prior ap­proval of the fed­eral government, any par­tic­u­lars filed by any tax­payer and sub­sec­tion (6) in cat­e­gor­i­cal terms states: “Noth­ing con­tained in sub­sec­tion (1) shall pre­vent the fed­eral government from pub­lish­ing par­tic­u­lars and the amount of tax paid by a holder of a pub­lic of­fice as de­fined in the Na­tional Accountability Bureau Or­di­nance, 1999 (XVIII of 1999).”

When about 70 per­cent of Pak­istani leg­is­la­tors – mem­bers of the Se­nate and the Na­tional As­sem­bly – were ex­posed for not com­ply­ing with Sec­tion 116(2) of the In­come Tax Or­di­nance, 2001 by fail­ing to file tax re­turns, wealth state­ments and per­sonal ex­penses hav­ing tax­able in­come of Rs500,000 in tax year 2011, they ac­cused the FBR of “il­le­gally” dis­clos­ing data. On the con­trary, the FBR was proven guilty for not tak­ing any ac­tion against th­ese de­fault­ers and not pub­lish­ing their tax data which would have en­sured trans­parency in the elec­toral process.

How­ever, it is worth not­ing that vi­o­la­tion of tax laws is not con­fined to par­lia­men­tar­i­ans. The elite – mem­bers of the civil-mil­i­tary bu­reau­cracy, the landed aris­toc­racy, politi­cians, re­li­gious and spir­i­tual lead­ers, loan ben­e­fi­cia­ries, un­scrupu­lous busi­ness ty­coons – flout the laws of the land with im­punity and take pride in do­ing so. Since as­sets and tax dec­la­ra­tions of pow­er­ful civil-mil­i­tary-ju­di­cial hi­er­ar­chy are not avail­able, the ci­ti­zens can­not know how much state land was given to them at throw­away prices and whether they paid tax on dif­fer­en­tial of mar­ket value as en­vis­aged in Sec­tion 13(11) of the In­come Tax Or­di­nance, 2001 for this and other sim­i­lar favours at tax­pay­ers’ ex­pense.

This is the stark re­al­ity of to­day’s Pak­istan – leg­is­la­tors make a mock­ery of laws en­acted by them, and the civil-mil­i­tary-ju­di­cial com­plex takes cover un­der spe­cial laws to avoid pub­lic dis­clo­sure of as­sets and tax dec­la­ra­tions. Ar­ti­cle 19A of the con­sti­tu­tion says that “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.” Ex­plain­ing the scope and im­port of this fun­da­men­tal right, added in the supreme law of the land through the 18th Amend­ment, Jus­tice Jawad S Khawaja in his note in Watan Party & Oth­ers v Fed­er­a­tion of Pak­istan & Other PLD 2012 Supreme Court 292 (com­monly known as the ‘Me­mogate Scan­dal’) held that “Ar­ti­cle 19A has thus, en­abled ev­ery cit­i­zen to be­come in­de­pen­dent of power cen­tres which, hereto­fore, have been in the con­trol of in­for­ma­tion on mat­ters of pub­lic im­por­tance... Ar­ti­cle 19A is a grant of the con­sti­tu­tion and, there­fore, can­not be al­tered or abridged by a law en­acted by par­lia­ment... It, there­fore, will not be for this court to deny to the ci­ti­zens their guar­an­teed fun­da­men­tal right un­der Ar­ti­cle 19A by lim­it­ing or triv­i­al­is­ing the scope of such right through an elit­ist con­struc­tion whereby in­for­ma­tion re­mains the pre­serve of those who ex­er­cise state power.”

Since the Supreme Court has cham­pi­oned the cause of peo­ple’s right to in­for­ma­tion in PLD 2012 Supreme Court 292, it is a le­git­i­mate ex­pec­ta­tion of the ci­ti­zens of Pak­istan that as a first step, the honourable judges of the Supreme Court and high courts vol­un­tar­ily make pub­lic their as­sets and tax dec­la­ra­tions. The chief elec­tion com­mis­sioner and other mem­bers of the ECP should also do it at once to counter the crit­i­cism of the par­lia­men­tar­i­ans who feel that they have been sin­gled out in re­spect of dis­clo­sure of as­set and tax dec­la­ra­tions. The ex­er­cise of the con­sti­tu­tional right to ac­cess to in­for­ma­tion in all mat­ters of pub­lic im­por­tance is nec­es­sary for trans­parency, accountability and good gov­er­nance – es­sen­tial el­e­ments of demo­cratic dis­pen­sa­tion. At the heart of Ar­ti­cle 19A is en­sur­ing the accountability of all. Log­i­cally, the right to in­for­ma­tion must start from those who judge, ad­ju­di­cate and leg­is­late. While le­git­i­mate con­cerns have been ex­pressed about bla­tant vi­o­la­tions of tax laws by the par­lia­men­tar­i­ans, no ef­fort is made till to­day to pub­lic the tax and as­set dec­la­ra­tions of the pow­er­ful mil­i­tary-civil-ju­di­cial trio that has been the ben­e­fi­ciary of state lands and has never paid tax on the lands as re­quired un­der Sec­tion 13(11) of the In­come Tax Or­di­nance, 2001.

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