How not to collect tax

By its inability to collect taxes, FBR single-handedly acts as the biggest roadblock to Pakistan’s progress


Naeem Sadiq October 03, 2021

Any country where less than 2% people pay tax will find it difficult to breathe, much less progress. It will struggle for its existence and become woefully dependent on foreign loans. Its security and sovereignty will be under constant threat and its ordinary citizens will live on the fringes of poverty. This is where Pakistan stands today — thanks to FBR’s utter inability and unwillingness to perform the task that is its reason for being.

But let’s pause and ponder for a moment. Why must one be overly critical of FBR? Have most other departments not failed just as miserably. Those responsible for education have kept 25 million children out of school. The EOBI has failed to register 90% of workers. The municipalities do not efficiently collect their own garbage and in 70 years we could not create a single nation-wide Emergency Helpline. How is FBR any different?

By its inability to collect taxes, FBR single-handedly acts as the biggest roadblock to Pakistan’s progress. It makes Pakistan fail asymptotically, which is a more painful and prolonged version of failure. The only escape route still open to Pakistan is to creatively think of brave new solutions, make massive use of modern technology and bypass its archaic and colonial bureaucracy.

Just as the Sindh Police in the last 70 years has not learnt the difference between a valid and a fake car number plate, the FBR has not been able to understand that there are only less than 0.1% citizens who can fill its complex ‘cob-web’ based tax return. Thus our system is designed to ensure that 99% people cannot file a tax return. An ordinary citizen wishing to pay say Rs10,000 tax to the government must first pay Rs15,000 to a tax consultant. He will thus do neither.

It is impossible for FBR to understand that its ‘Asaan’ tax app is not ‘Asaan’. That all that was needed was to design a one page simple form in Urdu and English which could be filled by even a student of class eight. That the tax payment should not require any PSID, ‘chalaans’, or queuing in banks. That an FBR’s bank account number, one’s CNIC and a mobile phone is all that should be needed to pay the tax. That the FBR’s full page newspaper ads on ‘Be a Tax Filer’ are a waste of tax payers’ money. That the FBR instead ought to advertise ‘How to be a Tax Filer’ and provide easy and simple solutions.

It is mind-boggling that the FBR publicly announces that owners of less than 500 square yards of urban land or cars less than 1000cc need not file a tax return. Thus 98% people of Karachi living in less than 500 square yard homes need not file a tax return. The FBR ought to require every citizen to file a tax return, even when there is no tax liability. Tax return is a great method to expand the formal economy, to know how much is earned by each individual and household and to develop a basis for providing compensation to the needy. A good FBR tax system, requiring all citizens to submit a tax return, should also be able to detect those millions of exploited citizens who are not paid even the minimum legal wage.

If FBR was really keen on tax collection, it would have pushed for introducing the wealth tax — a tax that conveniently and with the collusion of the rich elite has been dispensed with. This could not just considerably increase the tax collection but also bridge the rising inequality between the rich and the poor. A modern and pragmatic FBR is central to the progress of Pakistan. A mandatory requirement for filing tax returns and a system that is easy, user-friendly and rewarding is the need of the hour.

Published in The Express Tribune, October 3rd, 2021.

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