KARACHI: Lately I’ve been thinking, we should not pay any taxes to the government of Pakistan.
All I have read (in the books we read in Pakistan) and seen (practically happening in developing countries) is that the government levies taxes on the public in return for some basic utilities and benefits that they provide to the public. In case of Pakistan, I don’t see any of the utilities/ benefits provided by the government for the welfare of the general public. Or let’s just say that I don’t see enough to warrant the governments right to demand taxes. Amenities like power, water, health, education, road infrastructure, affordable and reliable road and rail transport, public parks etc. Let’s see what our government has done on all these fronts.
This is a big issue. Not everyone has access to clean water and even those who have, you can never be sure if it’s pure or contaminated. And then there is the chronic shortage. What to talk about the rest, when the largest and most happening cosmopolitan “Karachi” has never had its problem of water resolved.
The condition of our government hospitals is not a hidden fact. Everyone knows the standard of hygiene and services available to the poor patients that end up in these hospitals. The fact is that due to the extremely poor standard of government hospitals, the marginally better condition of private hospitals are heaven for those who can afford them. But still the dilemma remains that the government has no check on any of them.
The conditions in the education sector are as bleak as our health sector. They are perfectly comparable as the condition of public health is worst at best and the mushroom growth of private institutes is not solving the problem for the masses, as they are very costly. Second, there seems to be no real government control or monitoring of the standard of the syllabus.
Pathetic would be an understatement. I don’t even feel like talking about it. Initially the roads are broken, then they stay that way for years, then the stones are thrown all over the road (with the metal road underneath), then again it is left like that for years (so that the passing cars may level the stones) and then finally the road is constructed in patches and breaks. Once the road is completed, two things happen. Either some other government department (Sui Gas or Wasa or Wapda or PTCL) will dig it up again for their cables or pipes, or – and this happens a lot – by the time everyone has had their share of digging it up the road will have become worn out over time. This happens faster if it rains or if there is over-flowing sewage.
Road and rail transport
I am sure our economists planners can easily see that one of the easiest ways of reducing traffic congestion and fuel imports is to increase the level, both quantity and quality of public transport. This way more people will opt to not use their cars – as is the case in most developed economies with efficient public transport - there will be less cars on the road, less fuel consumed, less parking issues, less wait times at intersections and traffic lights with engines idling – and consuming fuel- and all of this can contribute to a reduction in the fuel import bill, which will help conserve our forex reserves.
And then there is the issue of multiple taxation. This is so convoluted and layered at times that it’s hard to figure out exactly how much tax we have actually paid on something.
Let’s take the simple example of say, a pencil. We pay for it, with income that is taxed at source. Then we pay sales tax on it. And in many cases we end up paying sales tax on it even if the retailer is not maintaining proper books and that sales tax may never make it to the government. So not only are we subject to double or even triple taxation, the feeling that this will probably do no more than end up lining the businessman’s pockets is frustrating.
And it is even more frustration when we are constantly barraged with the government saying that the economy is going through tough times and people need to pay taxes and be responsible and step up to the plate and all that. But at the same time, we see that the government will not reduce its own expenses, unless forced into submission by a political ally or opponent. We see that the government keeps on saying that our trade deficit is swelling, and how petroleum imports make up a huge portion of it, yet government functionaries at all levels will not agree to use smaller cars, and even lesser number of cars. That the government is willing to impose high import duties on the import of small cars, but government functionaries frequently get duty waivers. That the government says that they want to increase tax revenues, but for some reason any legislation that hints at increasing the tax base – and carries with it the suggestion that politicians or their allies might get hit – never seems to make it past the initial draft stage.
And it is predominantly the salaried class which ends up paying taxes regularly, while businessmen, industrialists and other self-employed often have the option of simply transferring any increase in costs to the end consumer, thus minimising their own liability.
The very rich are getting richer while many of our wages have been stagnant or dropping for years. Especially if we rationalise it with inflation and calculate how far one rupee went five years ago, and how far it can go today. Based in those terms, the bulk of the salaried class actually makes less money today and their buying power has fallen.
So why do so many of us pay our taxes? Two hundred thirty or so years ago, in the United States, this was called “taxation without representation” and they threw out the government.
I believe that portions of everyone’s labour should contribute to the collective well-being of the community and that’s why I say that our current tax system is ethically bankrupt. The issue here is about where the money is going, how it’s being spent, and how the spending decisions are made. I am sure if the government can come up with honest answers to these questions, and convince the people that it is sincerely doing its best in the circumstances, more people will pay taxes, or at least the ones who already are, will do so willingly.
Published in The Express Tribune, August 6th, 2012.
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Chai and Paratha Hotels in Karachi are doing Roring business. Simple arithmatic tells us Fortune being made at Karachi Taxpayer expense. Every hour hot cups and cups of Chai, Paratha, Anda Paratha, Untaxed. When these Chai Khokas, Hotels, come under Tax net, they begin to enter business stream. Sind sales tax applicable on these hotels? No Registration therfore No Tax. Inequality by Tax Authorities being practiced. We Pay Tax but there is no Return in our Old Age. There is No Benefit to Tax Paying Citizen or being a Taxpayer in Pakistan. The Tax Paying Citizen in Pakistan are Born Loosers. Its not Tax, its Extraction on whoever Registered.
Price of evrything has taxes baked into it.
i agree with every single word of the writer.
Are there any limits to taxes? Are all taxes ligit? It has been said: The power to tax is the power to destroy ~ Frank Chodorov.
You want people to pay taxes, make it fair. I am not going to pay taxes if the person next door to me does not. If I pay taxes, I dont want to be hounded by FBR officials asking for a bribe otherwise they will make a fake case against me.The problem is not people paying taxes, but it is a problem with Pakistan being part of two worlds, the elite which can get away with anything and the rest which are pinched hard to make up for the shortfall the elite create.
Not having to pay taxes is actually a great advantage of living in Pakistan. It's good for the economy too because it keeps funds in private hands where they are used most efficiently.
@AN: please go look at the concept of marginal relief concept in our tax laws.
What does the state give back to a citizen who pays taxes:
A citizen has to get and pay for his own security,own medical care,own education,utilities.
I also want to comment on salaried tax which is highlighted by Mr. Baig.
In Budget 2012-13, a mistake rather a blunder has been made by FBR and if it’s intentional which certain personnel of FBR claims, it’s a refined form of BHATTA.
You see according to these new slabs if a person earns Rs. 2,500,000 his tax is Rs. 262,500/-
However, if his income exceeds by just Rs. 1 and he earns Rs. 2,500,001 he will be paying Rs. 420,000/-
Means by earning just additional One Rupee he will be paying extra Rs. 157,500/- (420,000 – 262,500).
FBR must consider to resolve this anomaly. And as far as additional revenue measures are concerned, please check the other untapped areas that are needless to replicate here.
The country in which no one pays taxes is Somalia. You want Pakistan to become Somalia?
You probably aren't even paying taxes...go and serve your country instead of writing worthless articles.
Its a catch 22 situation
If you do not pay taxes then you will not get utilities. But since you do not get utilities, you will not pay taxes. Now since Uncle Sam is going to stop paying rent/Aid after 2014, You will not get utilities anyway.
If you do not pay taxes then you have no right to demand utilites or for that matter even good governance
If the government wants tax; they should start by taxing the feudal lords sitting in the National & Provincial assemblies. Lets see how that goes.
"Paying taxes and storing that money in the state's treasury is what makes a country strong. As Thomas Hobbes said in his book Leviathan, a country without a strong central government will weaken and collapse. what makes the centre strong for any country? Money, State Treasury, the state's coffers.
The secret of USA, UK, France etc is that they have efficient tax collection systems. that is what keeps them strong and running. US advanced weapons capability comes from having the revenue to fund research. if a state's treasury is empty, how can they do anything? from making weapons to protect themselves to repairing the condition of a road. Everything requires money. money comes from taxes.
a strong private sector can drive the economy, but a strong social infrastructure maintenance requires tax revenue.
What makes India better and stronger year by year, is the fact that they have caught on.Invite Foreign Investment, collect tax revenue, build safer country both internally (police, law and order) and externally (developing advanced weapons by funding due to tax collection), invite more foreign investment by making the country look feasible for doing business, repeat.
and yes, even though they are still corrupt etc, they are gaining step by step.
What pakistani government does not understand is that "TAX" is supposed to be treated as the people's money. not belonging to a person in the government. It is the people's money, to be used to build better roads for the people, better education quality for the people, develop defense capabilities for the people, develop better police for the people. it is not to be consumed by one group.
Pakistan is a weird case. even a student of economics can see the long term importance of tax revenue for a country. but ... the list could go on.
TL;DR Tax evasion hurts pakistanis all as a whole country. In the long run, it makes them weaker."
I Agreed with every word of this article...