Division between tax filers, non-filers

Those who file taxes are those who go by the book; they want to pay Pakistan its due share

There should be no doubt that the government has introduced a string of measures aimed at making the distinction between filers and non-filers of income tax returns very clear. From withholding tax on banking transactions, which led to traders all across the country take to the streets, to that on vehicle and property transfers among others, the PML-N has tapped at every avenue it could, to not only increase tax collection, but increase the number of filers. Many stakeholders and analysts raised doubts on the government’s intention. If the move was aimed at increasing tax collection, something the government has so invariably done citing the country’s low tax-to-GDP ratio, then filing taxes and claiming refunds would put the FBR at the backfoot in terms of collection.

If the move was aimed at increasing the number of filers, then the latest development that shows the number went up by just 10,745 in tax year 2015 has proved its policy hasn’t worked. So why has it that the Pakistani people, despite having to pay a higher non-compliance cost, have not become income tax return filers. The answer is not that complex, it isn’t worth it, they argue. The cumbersome procedure and complex tax laws mean that citizens have to hire an expert to file their tax returns. In a population of over 200 million, one can only estimate since a census hasn’t been held in 18 years — a huge chunk lives below the poverty line. A huge slice works in the informal sector, which has been booming in recent years, and those who do work in the documented economy fear the FBR, as well as the complex web of tax laws. Meanwhile, some have too much wealth to hide that filing taxes is actually meant to be avoided. Those who do file taxes are those who go by the book; they want to pay Pakistan its due share. But in a country where going by the book is considered, and sometimes is, an ordeal, there are bound to be just a handful of those.

Published in The Express Tribune, September 20^th, 2016.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.