Editorial : Tax evasion - Thursday 21st April 2011

PAKISTAN is a haven for those who do not want to pay their taxes. Nobody will ask any questions, let alone arrest and punish anyone for tax pilferage, even if the lifestyle being maintained is luxurious and well beyond one`s declared means. The number of people filing income tax returns has, therefore, dropped radically over the years. This year, for example, less than one per cent out of 180 million people filed their income tax returns. The non-filers comprised the country`s wealthy elite including politicians, generals, landlords, traders and others who have very intelligently kept their incomes out of the net. Little wonder then that the gap between the amount of tax owed and that of tax paid voluntarily and on time is expanding. Revenue generated through tax accounts for less than 10 per cent of the country`s GDP, one of the lowest in the world despite the heavy indirect taxation on the common people. This leaves economic survival heavily dependent on foreign aid and loans.

However, times seem to be changing now. International donors and lenders are refusing to help us unless we help ourselves. The international pressure on the government has forced it to at least think of ways to increase tax revenues to ward off a possible economic collapse. Last month, it announced it would partially withdraw tax exemptions to certain sectors. Now the Federal Board of Revenue plans to serve notices over the next couple of months to 50,000 tax evaders living a life of luxury. One hopes that the FBR will soon take steps to also bring into the tax net the rest of the 2.3 million people who have been identified as having “sufficient financial resources” but who do not file returns. If implemented honestly, it could prove to be the first such major attempt in recent years to broaden the extremely narrow tax base. The principles of fairness and equity demand that the drive does not leave out the powerful regardless of their political clout if the purpose of the exercise is to instil fear of the law in the hearts of tax evaders.


Source : http://www.dawn.com/2011/04/21/tax-evasion-2.html