Tax the ruling elite heavily, say experts

Published: May 7, 2011
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Development is hindered by tax evasion, dependence on foreign aid.

Development is hindered by tax evasion, dependence on foreign aid.

ISLAMABAD: 

In wake of the current economic standing of the country where the development sector seems to be following a regressive pattern, experts have stated that taxing Pakistan’s ruling elite and reducing the country’s reliance on foreign aid would be a sustainable solution.

Addressing a seminar by the American Institute of Pakistan Studies, social scientist Akbar Zaidi said that one of the core problems facing Pakistan today is taxation. Zaidi said that there are exorbitantly high rates of tax evasion by Pakistan’s elite and taxpayers from countries supporting Pakistan’s development initiatives have been subsidising Pakistan’s elite disproportionately. Zaidi elaborated that even if all of the US aid to Pakistan is halted it would only affect the country by 0.34 per cent.

“This is a political economy and it’s not the US. It is Pakistan’s ruling elite that are selling themselves cheap. It is not worth it,” Zaidi added.

“Pakistan’s ruling elite are unwilling and they loathe taxing themselves. They exploit the country’s geographical vulnerabilities, extracting rent for many strategic alliances. Pakistan’s elite and western governments are equally at fault for the absence of more equitable taxation efforts in Pakistan.”

According to Federal Board of Revenue (FBR), eight per cent of GDP is lost due to tax evasion which is roughly worth Rs1.27 billion. He further revealed that 70 per cent taxes are received from the corporate sector. Zaidi explained that five to six million people in Pakistan earn more than Rs25,000 and even if two million of these people are filing tax returns, the country would have enough revenue to fill gaps.

“There needs to be less aid given so they [elite] stand up themselves,” he added.

Meanwhile, Aitzaz Ahsan said that changes in Pakistan’s legal system are inevitable to eliminate poverty, promote social justice and implement policies to promote equity. Ahsan added that the elite have been successful in avoiding the law and there is a need for uniform law enforcement for all the citizens, irrespective of their social standing.

Published in The Express Tribune, May 7th, 2011.

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Reader Comments (8)

  • Ashmad
    May 7, 2011 - 10:21AM

    Who to impose ruling elite? To the ruling elite only the masses can be taxed thats why Pakistan has the highest ratio of indirect taxes /whitholding taxes in terms of GST, on electricity,fuel and other utilities and having defective rebate system makes it multiple times on fixed salary class and now te tax on tax what a country to live and do business.Recommend

  • May 7, 2011 - 10:21AM

    Tax is the new way of taking from people and filling pockets of international bankers with help from Azizs, Tareens and Sheikhs.Recommend

  • Ahmed
    May 7, 2011 - 11:11AM

    This is the topic which has been in discussion for a long time. But, the ruling elite will not give taxes, that is crystal clear and true without doubt. Now there are only people of Pakistan who will take this matter in their hands and boycott the ruling class unless they start paying taxes.Recommend

  • Qasim
    May 7, 2011 - 11:30AM

    “This is a political economy and it’s not the US. It is Pakistan’s ruling elite that are selling themselves cheap. It is not worth it,” BUT WHO WILL BELL THE CATS? Foolish to expect the parliment or executive, loaded with beneficiaries, to dig their own graves.Recommend

  • a ercelan
    May 7, 2011 - 12:54PM

    i do hope that experts include themselves amongst the elite that should be heavily taxed for both income and wealth! indeed, who will bell the cat? the armed forces live quite happily off usa largesse and so are not bothered even in self interest to ensure adequate taxation. plus would the generals like to be taxed? heaven forbid!

    meanwhile the poor are burdened more and more by taxes to repay public debt and very high inflation. banks make a killing.Recommend

  • meekal ahmed
    May 7, 2011 - 4:12PM

    These are stirring words no doubt. But these are also things that are well known. There is of course no harm in highlighting the issues again and again but we need to move beyond the stage of identifying the problem and do something concrete instead.

    I think the figures on tax evasion are an under-statement — especially if you include data on the informal economy and money earned through smuggling and the arms and drug trade. Recommend

  • Moazzam
    May 7, 2011 - 6:08PM

    It is clear-cut to understand whoever speaks against wealth tax in Pakistan at sundry forums secretly supports elites’ ill agenda to stay away from the wrath of FBR; the collection of wealth tax is in practice in India and France but Pakistan is richer and more advanced than that countries that’s why our worthy, literate, and genius politicians think Pakistan doesn’t need wealth tax. Enough is quite enough now, these hypocrites of politicians shall allow FBR to impose wealth tax on elites, that tax is specifically for elites. Musharraf abolished wealth tax in 2002 because army generals were getting nabbed for holding huge wealth by FBR then, those who argue Musharraf wasn’t corrupt can know his corruption is so exposed by just this act of his.Recommend

  • Anon
    May 8, 2011 - 4:48AM

    Nicely written.Recommend

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