ByThe recently passed Tax Laws (Amendment) Bill 2024 is facing potential legal challenges due to concerns regarding the imposition of restrictions on economic transactions for non-filers. Experts believe these restrictions may violate fundamental rights guaranteed by the Constitution.
Key Concerns:
- Violation of Fundamental Rights: The bill’s provisions, such as restrictions on purchasing property, vehicles, and opening bank accounts for non-filers, are seen as potential violations of the right to freedom of trade, business, and profession (Article 18) and the right to property (Article 23) under the Constitution.
- Excessive Powers to the FBR: The bill grants the FBR extensive powers, including the authority to seal businesses, seize assets, and suspend bank accounts, which are considered excessive and may lead to misuse.
- Concerns over “Sources of Investment and Expenditure Statement”: The requirement to file a “sources of investment and expenditure statement” is seen as a violation of the self-assessment principle enshrined in the Income Tax Ordinance.
- Privacy Concerns: The provisions related to data sharing between banks and the FBR raise concerns about the privacy of taxpayers.
Impact on Economic Activity:
- Restrictions on Economic Activity: The restrictions on purchasing property and vehicles are expected to negatively impact economic activity and hinder growth.
- Increased Cash Economy: The ban on opening bank accounts for non-filers may lead to an increase in the share of the informal economy.
Other Concerns:
- Misuse of Family Members: The provision allowing taxpayers to conduct transactions in the names of family members raises concerns about potential misuse and circumvention of tax laws.
- Outsourcing of Audits: The reliance on private sector auditors for tax audits is seen as a step back and may negatively impact the capacity of FBR officials.
The Tax Laws (Amendment) Bill 2024 has generated significant controversy and is likely to face legal challenges in the coming months. The government needs to carefully consider the potential implications of these measures and ensure that they are in line with the constitutional rights of citizens and conducive to economic growth.
