Taxation and the common man

The latest cunning stunt to squeeze taxation out of the people of Pakistan is to use the national identity database

Editorial February 09, 2018

Death and taxes are proverbially two of the certainties of life, except that for the majority of Pakistanis the former remains a certainty while the latter is either avoidable or negotiable. A recent Bloomberg report says what has been known for many years — that less than one per cent of the people of Pakistan eligible to pay taxes actually do. The figure has featured in virtually every report on Pakistan issued by the IMF or the World Bank in the last 20 years as well as practically every other donor or lender. Much spluttering and windbaggery follows by successive governments along with a raft of empty promises to do better in the future. They never have.

The latest cunning stunt to squeeze taxation out of the people of Pakistan is to use the national identity database to build profiles of potential taxpayers — and then give them a squeeze. It is hoped to plug leakages — probably not — encourage correct property valuation — definitely not — lower individual tax rates — unlikely — and offer an amnesty programme — which has never worked in the recent or far past. With the tax to GDP ratio of about 12 per cent and among the lowest in the world the government will now face the same stiff resistance that it has faced in the past — stonewalling business and corporate sectors and a cloak of invisibility adopted by anybody or entity that has a measurable expenditure.

The people of Pakistan are going to be asked to account for their wealth; and considering the example set by any number of conniving politicians of late there is little incentive to account for anything. The most obvious of paper trails can be brazenly denied as has been ably demonstrated and most tax-eligible citizens could not give a hoot for the ballooning current account deficit that expanded to about 60 per cent or $7.4 billion over the last six months of 2017. Doubtless the sages at the Sustainable Policy Development Institute in Islamabad are having difficulty containing their mirth. Comparisons with the survival possibilities of a snowball in hell are perhaps being bandied about. And the chances of the plan succeeding? Zero.

Published in The Express Tribune, February 9th, 2018.

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numbersnumbers | 4 years ago | Reply Once again, taxes in Pakistan are just for the little people!
cautious | 4 years ago | Reply It's not an insurmountable problem. In the USA everyone who works has to have social security number (national id #) the govt compares it's database with the tax returns filed - if you haven't filed a tax return somebody is going to ask why. Each business also has an ID number - and if you don't file a tax return somebody is going to come knocking on your door. USA also requires banks and certain vendors to provide information which gets automatically cross reference to your tax return (interest payments etc). . If you don't pay your taxes you can go to jail. The govt can also have your employer deduct payments from your paycheck and place liens on your home/assets. In some cases the govt will hire a collection agency to pursue payment - those agencies can be relentless because they only get paid if they collect.
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