Miftah Ismail criticizes the government’s proposal to allow FBR to arrest people

Former Finance Minister Miftah Ismail slammed the PTI government’s proposal to grant the Federal Revenue Service (FBR) the power to arrest people, warning that the law would lead to harassment of citizens.

“FBR’s tax inspectors have the right to arrest people. This will not increase income, and FBR will harass people,” Ismail said at a press conference on the budget. He also stated that FBR has not yet refunded Rs 7000 crore to the people.

The PML-N leader claimed that the chairman of the party, Shahbaz Sharif, said that the PTI government was “turning around” in taxing infant milk and food. He also claimed that the government of Imran Khan had illegally allocated Rs 2,920 crore for privatization.

Ismail said the government has allocated 610 billion rupees from the oil tax. He said that according to calculations, this means a tax of Rs 30.50 will be imposed.

PML-N leaders stated that this would mean an increase in oil prices and eventually lead to inflation.

The former finance minister claimed that the World Bank had stopped making payments to Pakistan.

“These people (PTI ministers) have not achieved any of the goals of the International Monetary Fund in the past two years. They have suspended the IMF’s plans,” Ismail claimed.

He also called on the government to withdraw its decision to levy taxes on government employees’ medical benefits.

Finance bill proposes to grant FBR broad powers of arrest

The 2021-22 Finance Act proposes to grant the FBR some “basic and broad powers” ​​to arrest and prosecute taxpayers who conceal income. news Reported earlier this week.

According to the proposed changes, starting from the Assistant Commissioner, all Inland Revenue (IR) officials can arrest taxpayers accused of tax crimes without even filing a complaint with a special judge.

Therefore, the concept of pretrial arrest and detention was introduced into the income tax law for the first time. The only requirement for the arrest of a taxpayer is that the arresting official “believes” that the taxpayer has committed a crime that can be prosecuted in accordance with the law. You don’t even need to file a complaint with a special judge in advance.

However, the Standing Committee on Finance of the Senate rejected the proposed power of Federal Revenue Service officials to arrest and prosecute taxpayers for allegedly concealing income. Opposition members described the proposed powers of FBR officials as “stern” and made it clear that they would not approve in Parliament.

The question that follows is why the FBR has proposed broader powers when there are already prosecution provisions in the 2001 Income Tax Regulations (ITO).

Tax experts said that the Income Tax Regulations 2001 includes a complete chapter that contains provisions for prosecuting a wide range of crimes, from concealing income to failing to file returns and statements.

Penalties for these crimes include imprisonment of one to seven years and a fine of up to 5 million rupees. These penalties do not include any other responsibilities imposed on defaulters under the regulations, including recovery of tax evasion, fines and surcharges for breach of contract.

The procedures required to prosecute and punish violators include filing a lawsuit with a special judge appointed by the federal government. Only those who are currently or have served as conference judges can be appointed as special judges to hear income tax violations.

The income tax commissioner can file a complaint with a special judge, who will proceed in accordance with the Criminal Procedure Act of 1898. Appeals against special judge orders are filed by the High Court. Only after the special judge completes the trial and imposes punishments can the offenders be arrested and imprisoned.

Now, the 2021 Finance Act proposes some fundamental changes to the aforementioned procedures and grants FBR officials broad powers to arrest and detain taxpayers.

According to the proposed law, the officer who initiated the arrest will notify the special judge of the arrest within 24 hours after the arrest and show the arrested person to the special judge or magistrate. The special judge can order detention for an unspecified period of time or accept a bail request .

At the request of the arresting officer, the special judge can also remand the arrested person for 14 days for investigation. The requirement of detention by investigators is self-contradictory, because if the arrester has important evidence that the arrested person committed the crime that led to the prosecution, the arrest will be affected.

Another provision of the proposed law to prove that the right to arrest will be used without any evidence is that if after the arrest and questioning, officials believe that there is insufficient evidence or reasonable grounds to suspect the person, they shall be released at that time after the execution of the pledge , And should instruct the person to appear in court when necessary, and request the special judge to remove the person from his duties.

The proposed law completely ignores the normal tax assessment procedures under the Income Tax Law and attempts to introduce a parallel system of inquiry and determination of liability, but it does not specify whether these dual systems operate independently or if one follows the other.

It must be remembered that under sales tax and federal excise tax laws, similar arrest systems are available because the nature and plans of these laws are completely different from income taxes, and these powers can justify the management of these taxes.

But even in the case of sales tax, the court did not approve these coercive powers under the normal procedure to quantify and determine the tax liability in advance. However, while trying to obtain similar powers under the income tax law, FBR seems to have ignored these court decisions.

The interpretation of the proposed arrest and detention powers that have been in effect for the past 100 years since the enactment of the Income Tax Law of 1922 fully deviates from the proposed arrest and detention powers is sufficient to demonstrate the rigorous nature of the proposed law.

Abuse of these powers to harass taxpayers may lead to corruption. It is impossible to understand why the Minister of Finance himself has admitted and expressed his concern about the FBR’s harassment of taxpayers, and why he should arm these officials with this oppressive and arbitrary power to bring harassment to an unprecedented level.

The Minister of Finance intends to use this budget and fiscal bill to stimulate economic recovery and growth, but giving the FBR such a powerful power will completely destroy the confidence of businessmen and ordinary taxpayers.