Why are we so tax averse?

The Pak Banker - - 4EDITORIAL - Bi­lal Me­mon

SOME­ONE out there is mak­ing more money than you, yet pay­ing less in taxes than you are. There are hu­man be­ings wealth­ier than you are, but get away with con­tribut­ing peanuts to­wards the coun­try's rev­enue streams. These thoughts are more than enough - if the in­cli­na­tion to save money alone isn't - to en­sure that lit­er­ally ev­ery­one makes a valiant at­tempt to es­cape the hor­ror of be­ing sub­jected to what is called Pak­istan's tax sys­tem.

Less than a mil­lion tax re­turns were filed last year, a shame­ful statis­tic for a coun­try boast­ing a pop­u­la­tion of 190 mil­lion - oh wait, of­fi­cial data on pop­u­la­tion is not avail­able since the last cen­sus was held in 1998. And, here lies the prob­lem. The gov­ern­ment, rep­re­sented by many faces over the years, does not do enough, say peo­ple who don't file tax re­turns, ar­gu­ing that their hard-earned money goes to waste when it makes its way to the na­tional kitty. We pay sales and in­come taxes, don't we, they con­tinue the ar­gu­ment. The gov­ern­ment doesn't in­vest in us, doesn't utilise taxpayers' money ef­fi­ciently, so why should we pay taxes? It is an end­less, point­less de­bate. Maybe.

A sig­nif­i­cant por­tion of the coun­try's pop­u­la­tion is un­aware, even the more ed­u­cated ones, that fil­ing tax re­turns is bind­ing on ev­ery citizen. In­come taxes, mostly de­ducted at source, are not the only tax one needs to pay. All as­sets, cash or oth­er­wise, need to be de­clared in these forms so that the gov­ern­ment can tax ap­pro­pri­ately. This doesn't hap­pen. A mo­torist will take the wrong way if it saves time and fuel, con­di­tioned also on be­ing able to es­cape the wrath of the traf­fic po­lice. Why would he want to opt for mak­ing a turn lo­cated far away, be­yond his con­ve­nience and reach? You do this by mak­ing it ex­pen­sive for him to dis­obey the law. This is how en­force­ment of law is meant to be car­ried out.

The 'beauty' of Pak­istan's tax sys­tem is that it is less ex­pen­sive to evade taxes than to pay them. The coun­try's tax ma­chin­ery has been un­able to en­force tax laws, en­abling busi­nesses and cit­i­zens to hide in what should ideally be a shamed cor­ner. Things have started to change though. The gov­ern­ment, in the latest bud­get, has in­creased tax rates for non-fil­ers - mostly by us­ing other chan­nels to en­force the law on its be­half. Be it through the ex­cise and tax­a­tion de­part­ments in each province or banks placed at ev­ery nook and cor­ner of ev­ery city. This de­vel­op­ment is wor­ry­ing be­cause here, too, the Fed­eral Board of Rev­enue (FBR) has es­caped a much-needed over­haul. This has irked the com­mon man. Why hasn't the FBR been held ac­count­able for its per­for­mance that has clearly led to this sit­u­a­tion? Traders and var­i­ous busi­ness groups, at the very fore­front of protests against these 'dra­co­nian tax mea­sures' as they call it, have threat­ened with calls of strikes and shut­ting down their work. The gov­ern­ment may be ac­com­mo­dat­ing, but will not back off from its stance. It has a point to prove to its in­ter­na­tional lenders and will go all-out in show­ing its might. The com­mon man, how­ever, will con­tinue his sim­ple cal­cu­la­tions - is fil­ing tax re­turns, given its long, te­dious and ex­tremely dif­fi­cult process, re­ally worth the trou­ble if the gov­ern­ment wouldn't be giv­ing much in re­turn? Per­haps, here the gov­ern­ment can show that the steps it has taken re­cently have been in good faith. It can start by sim­pli­fy­ing the process for fil­ing tax re­turns and tak­ing other much-needed mea­sures to fix the coun­try's tax ma­chin­ery. Ev­ery­one wants an as­sur­ance that their money is be­ing put to good use. In­ter­na­tional lenders seek the same guar­an­tee. Why can't Pak­istani cit­i­zens be ex­tended the same cour­tesy?

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