The Senate Finance Committee, while considering the taxation proposals included in the 2025-2026 Budget presented last week, has identified the proposal to allow tax commissioners to send notices of money laundering to individual taxpayers, and to arrest them, as one that should be dropped. The proposal does not really grant the Central Board of Revenue new powers, but merely moves the power down to individual regional commissioners of various taxes, instead of requiring the CBT Chairman to make the finding. Apparently a move at decentralisation, and one which would cause smoother working for the CBR, the Senate panel noted that it could be weaponised and used against political opponents, not to mention the harmful effect it would have on the economic atmosphere. It is clear that the Committee is only expressing the sentiments of the business community. It should not be forgotten that the various taxation statutes already provide the taxation officials quite draconian powers, and the fear of the Committee, that the new powers would be used against the government’s political opponents, seems justified.
It is not as if such powers, even unenhanced, have not been used before. The episode of how the then government used income tax notices in an attempt to bring Mr Justice Qazi Faez Isa to heel, must not be forgotten. Earliers, the National Accountability Bureau had initially been mandated to take cognisance of tax cases. This was ultimately withdrawn, after an outcry by the business community. The government must tread a careful line between preventing concealment and enhancing tax revenue. However, it should recognize that giving taxmen such a major weapon might boomerang, as dishonest taxmen used it to generate income for themselves, rather than enhancing state revenues.
The government should not neglect the interests of the business community, while at the same time recognizing its members’ almost pathological desire to avoid taxes by concealment, evasion or avoidance by any means possible. There is supposed to be complete malleability in the taxation proposals, so there is no harm in drooping this one. At one level, it is not really a taxation proposal, for no value can be placed on it, except perhaps a guesstimate. Withdrawing it will also go a long way to reassuring the business community, without engaging which the government cannot achieve its objectives.
