Revamping capital gain tax to pollute stock markets: Dr Ikramul Haq

ISLAMABAD: International tax consultant and expert on studying international money laundering operations and drug economy, Dr Ikramul Haq, on Sunday said allowing injection of black money in the stock markets will not only facilitate money laundering but also have negative impact for much needed revenue generation initiatives.

Approval of the proposal on revamping the Capital Gains Tax CGT is a counter move to FBR’s efforts to expand tax net, he said.

Extending immunity to tax cheats is violation of provisions of Anti-Money Laundering Act, 2010 as well as breach of international treaties signed by Pakistan, “it certainly amounts to sponsoring financial crimes,” said Dr Ikramul Haq.

Talking to Dr. Murtaza Mughal, President of the Pakistan Economy Watch PEW, he said that the move is meant to facilitate ruthless brokers’ mafia who fleece masses, hurt small investors, and manage funds of plunderers of national wealth.

Dr Ikramul Haq observed that giving legal cover to the money amassed by the corrupt, tax evaders, criminals, and drug traffickers cannot be justified under any circumstances.

At the occasion, Huzaima Bukhari, tax expert and Adjunct Professor at LUMS, said that state patronage to whitening dirty money is bound to transform Pakistan into one of the hubs of money laundering in the world. Corruption is destroying moral fabric of the society, she added.

International banking consultant Mohsin Rafique said that giving amnesty to the big fish in stock markets would further tarnish faith of masses in the system.

Role of a NRO banker is the Reshma Rental Power Plant case remained unnoticed that if investigated can result in startling revelations, said Rafique.

Dr. Murtaza Mughal said that small brokerage houses and individual brokers are losing interest in the business; total number of registered brokerage houses stood at 276 by the end of financial year 2011 as compared to 299 in 2010.

The KSE accounts for 52 per cent of the total brokers as compared to 29 per cent at the LSE and 19 per cent at the ISE, 93 per cent are brokerage houses while 7 per cent are individual brokers, he said.

He said that after every market crash, a broker emerged as owner of a bank. A top official who tried to safeguard interests of masses was shown the door during Eid holidays that left regulator impotent.

Dr. Mughal said that brokers’ mafia, known for price manipulation, blank sales, wash trades, insider trading, interexchange trades, provision of false information, noncompliance with Brokers and Agent Registration Rules, 2001, violation of general regulations and regularly trespassing Code of Conduct will now enjoy renewed strength.

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