1) Introduction 

The Tax Amendment 2024 bill, which was recently introduced by the finance minister in the National Assembly and Senate, intends to prohibit the transfer, register or purchase of real estate, automobiles, and restrict a significant number of transactions in the non-filer's banks. Though the bill also states that the FBR commissioner will have complete authority to block the non-filer bank account and that the account will only be activated after the individual completes their filing, the government essentially wants every citizen to file their income and get documented as soon as possible. The bills also suggests that government will be allowed to exchange data of high Risk person with the bank real time. 

2) Creating a Panic

The government appears to be indirectly encouraging all non-filers to withdraw their entire funds from banks and engage in cash transactions, thereby avoiding the documentation of their income. It seems that the individuals responsible for drafting these laws lack’s a comprehensive understanding of the fundamental issues surrounding Pakistan's financial landscape. The government's decision to restrict the opening of bank accounts will likely lead to an increased reliance on informal cash transaction channels. New workers will find it challenging to open standard accounts, which are essential for receiving valuable remittance inflows from overseas workers into their local bank accounts. In the absence of these accounts, they will inevitably resort to informal methods for transferring funds like Hundi/Hawla. Bill notes that once the non-filer account is restricted, he will be required to approach the FBR regional commissioner to have the bank account reinstated. This situation is likely to exacerbate bribery and corruption, as it is widely recognized that the FBR is notorious not for its tax collection efforts but for its practices of harassment and soliciting bribes from taxpayers. This assertion is supported by numerous reports and recent scandals involving FBR officials.

3) Blocking Economic Activity 

The proposed legislation may adversely affect tax collection and undermine the Federal Board of Revenue's (FBR) overall revenue projections, particularly as the FBR is already grappling with significant shortfalls in its revenue targets. As of June 2023, there are approximately 177 million bank account holders, while the total number of registered tax filers for the 2024 tax year stands at 5.6 million. Consequently, if this new law is enacted, it could instill fear among around 171.4 million bank account holders, leading to the freezing of their accounts. This situation could precipitate a crisis within the banking sector, as individuals may be compelled to withdraw their savings and investments to avoid the distress of harassment and bribery in order to access their own funds. Additionally, the prohibition on property purchases would further exacerbate the challenges facing the real estate sector, which is already struggling due to the current government's lack of effective policy. The remaining opportunities in this sector could be entirely diminished. It is essential to recognize that real estate plays a crucial role in generating employment for local communities and providing necessary funding for the market. These legislative measures could effectively stifle any remaining economic activity in Pakistan.

4) Conclusion 

As citizens of Pakistan, we all recognize the importance of tax compliance; however, the proposed legislation is likely to exacerbate existing challenges rather than resolve them. In countries such as Sri Lanka, Bangladesh, and India, individuals can acquire property without being registered taxpayers, and their bank accounts remain secure regardless of their tax filing status. It would be prudent for us to examine the economic advancements of Bangladesh and India, rather than pursuing an unrealistic first-world model that aims to make everyone a taxpayer overnight through this legislation—an outcome that even the lawmakers who crafted this bill understand is unattainable. Our primary focus should be on fostering job creation and stimulating economic activities that will naturally lead to increased tax revenue, rather than impeding the remaining economic endeavors.