Cricketers and taxes

The priority is not only nabbing cricketers, but also the big fish, too powerful to collar otherwise.


Editorial October 14, 2012

The Federal Bureau of Revenue (FBR) recently announced triumphantly that national cricket players don’t pay taxes or ignore paperwork in this regard. It has targeted 21 cricketers who did not file tax returns or  “used other loopholes in the system” to keep their income stashed away from the FBR’s scrutiny.

The Pakistan Cricket Board (PCB) deducts the tax at source but cricketers still need to file their returns like all other citizens under the Income Tax Ordinance 2001, requiring citizens to reveal all taxable sources of income. The penalty, if the cricketers want to come in from the cold, starts from Rs5,000 and can be as high as 25 per cent of the tax payable in a year. The non-filer will either declare his total income in a year or the tax official will declare it ex-parte.

The cricketers investigated by the FBR don’t file their tax returns and, therefore, may be hiding their total sources of income where the tax is not deducted at the time of payment. It would be wrong to name names and allow the nation to assume that our cricketers are tax dodgers: the fact is that all of them pay it through deductions made by their employers. For instance, Kamran Akmal’s two employers, the PCB and the National Bank of Pakistan, have made regular deductions at the source.

Because they did not file individual returns and relied on deductions at source, the cricketers don’t have a National Tax Number (NTN). Those who pay taxes do have an NTN; but they, too, have not been filing their wealth tax returns. Without an NTN, you can’t even buy a new car, a matter for which the cricketers can’t be blamed if they end up buying cars with no one checking. A whole lot of cricketers have been named in the newspapers to swell the general Pakistani lament that people don’t pay income tax. Let us not be seen as hounding our cricketers after they were unable to win the World Twenty 20 in Sri Lanka. It is morally incumbent on us to differentiate between them and the wealthy tax dodger, who stays out of the tax net. We have to take into account — something which the tax officer in the UK does informally — that in sports and entertainment, the earning lifespan is short and retirement can come even before superannuation.

But strictly under law, cricketers must submit their individual tax returns along with their wealth tax details, after which the FBR can take a lenient view and ‘regularise’ them. One says this because of the country’s generally dismal tax revenue scene, and if the FBR has a list of priorities, it should be going after some other segment of our taxable population and not the sportsmen.

Rich Pakistanis, including members of the National Assembly and provincial legislatures, pay next to nothing in tax. The US Secretary of State, Hillary Clinton, has been quoted as complaining, in the light of the quantum of aid the American taxpayer dishes out to Pakistan: “Pakistan cannot have a tax-to-GDP rate of nine per cent when landowners and all the other elites do not pay anything or pay so little it’s laughable.”

Normally, low-income countries have tax-to-GDP ratios of 15 to 18 per cent; middle-income countries have tax-to-GDP ratios ranging between 22 and 25 per cent, while the figure for high-income countries is around 40 per cent. Our 9 per cent results in the massive deficit which has to be plugged with foreign aid that cuts into our sovereignty. And reliance on indirect taxation spares the rich and hits the poor man. The latest Pakistani figures of poverty-increase — instead of poverty alleviation as seen in India — tell a sad story.

Let us not target the cricketers. Had the FBR gone after them — in a civilised manner — they would all have an NTN. Let us focus on the ‘long-term’ rich, who list everything under agricultural income and remain outside of the tax net. The provinces don’t even have a tax-collecting department and sales tax is being collected at the federal level. Because savings normally reveal wealth, our savings rate is also low. The priority is not only nabbing cricketers, which must be done gradually, but also the big fish, too powerful to collar otherwise.

Published in The Express Tribune, October 15th, 2012.

COMMENTS (7)

Biswa Mohanty | 11 years ago | Reply

great post

obviously in India cricketers are not the one who pays highest tax

so there income needs to be scrutinized

I think they need to consult on Tax farms in India

Mirza | 11 years ago | Reply

Everybody who is required to file the taxes must do that. If there is no wealth tax or other facilities they should claim them accordingly. Yet these high rollers are never filing any taxes as if they are above and beyond the laws of every country.

VIEW MORE COMMENTS
Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ