Pakistan's new tax chief is determined to force a jet-setting elite to pay their fair share, challenging an unspoken consensus among politicians and businessman that writing cheques to the government is strictly optional.
Less than 1% of Pakistan's 180 million citizens pay income tax and no one is believed to have been prosecuted for tax evasion in 25 years, to the dismay of Western allies who have contributed billions of dollars in aid.
"We will name and shame," said Hakeem, in his office which overlooks mansions with security guards that belong to members of the privileged class he has vowed to target.
Freezing assets
Hakeem, 49, believes he can inculcate a greater sense of responsibility in the top layer of society through a carrot and stick approach.
To instil a frisson of fear in the biggest dodgers, he is threatening to freeze assets and ban them from travel.
But he is also about to offer a 10-week amnesty that forgives past offenses and only places a small tax burden in the first two years of those who choose to accept.
The scheme is the best Hakeem can come up with given the government's failure to muster the political will to implement key economic reforms, including widening the tax base.
Pakistan's Western allies say boosting revenues to forge a more meaningful social contract between the government and its people is just as critical for stability as military campaigns against insurgents.
To tempt them into the programme, tax cheats will only need to pay a flat fee of around Rs40,000 for any amount of income they bring in over the next year. The following year, they will have to pay $40 more in taxes.
At the end of the second year, the tax rate will be re-evaluated and could return to normal rates, which run as high as 25%.
The National Database and Registration Authority (NADRA) has profiled more than 2 million offenders, detailing their luxury cars and houses, bank accounts and overseas trips.
Hakeem, the tall, grey-haired head of the Federal Board of Revenue, says he will release the names of offenders to the media.
"It's like a war," he said, displaying the profiles of offenders with their faces and names obscured. Foreign accounts, vehicles, trips and properties are listed.
"If this fails, I have to go."
Some say Hakeem has embarked on mission impossible. Previous government amnesties have been criticised as rewarding tax evaders and punishing honest citizens without doing anything to broaden tax collection.
Deep inequalities
But if Hakeem somehow beats the odds, his campaign could help ease Pakistan's deep social inequalities.
The wealthy attend lavish dinner parties, drive luxury four-wheel-drive vehicles and vacation in the West during the blistering summer heat while millions of poor Pakistanis brave chronic power outages in slums or impoverished villages.
One in five people live below the international poverty line of $1 a day.
"We'll eventually get each one of them. We must give people a chance to come and pay their taxes," said Hakeem.
"It's a computerised system ... We even know what colour shirt he (an offender) was wearing when he got on that flight."
Hakeem says evaders may have their identity cards suspended, although it's not clear if such action is legal. The cards are required for travel, banking and to validate any license.
The amount of tax collected has been going down in real terms even as the country looks to the West for help.
Britain has pledged to pay $1 billion over five years to upgrade Pakistan's schools. The US is giving Pakistan's powerful army more than $1 billion this year to help fight the Taliban. The country also owes the International Monetary Fund $7 billion.
Hakeem's organisation has already presented some famous Pakistani cricketers, such as former captains Younus Khan and Shahid Afridi, with a whopping tax bill.
But there have been no public demands for wealthy politicians or their millionaire backers to pay up.
History shows that Hakeem faces an uphill battle.
Businessman Jehangir Tareen said when he was serving as a lawmaker, it took him a year to get tax authorities to accept his payment because they were so afraid of setting a precedent for taking cash from the powerful.
"We filed a (tax return) and sent a cheque. They returned it and said, 'please don't do this'," he said. "People who pay tax honestly do not get rewarded."
That year Tareen, a passionate advocate of tax reform, was the only one of 269 federal lawmakers to declare how much tax he paid.
COMMENTS (12)
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Only the corrupt people are made head of a department and Mr. Hakeem is one of them. Bravo Mr. Hakeem show your prowess on the poor and middle class and share and chill with the rich class so long you live in this world. But remember you will be accounted for all your deeds and acts once you depart from this world.
All persons willing to contest Assembly elections be required to declare in the nomination form among others his income, tax paid, worth of properties owned (by him/her and spouse) for last two years.Any purchase / sale of properties, purchase of car and or luxury items,cash deposits in bank beyond an amount of say 50000 must mention their tax number and a system to for its reporting to FBR . It will help curb tax evasion.
@romeo:
Mr. Hakeem will be tough on the poor and will wag his tail with the rich and famous
I totally agree with romeo keeping in view the past record of Hakeem in NADRA.
I come to know Mr. Hakeem, when he was the Chief of NADAR where he was able to mint money from the middle class and poor masses, in the name of providing facilitation and to avoid long quees in a limited number of NADRA offices. One can see very long long quees of poor and lower middle class people waiting for their turns oustside the NADRA offices. I many times tried to approach any responsible officer including him through electronically means, but only way I found to lodge complaint through their system, which I did many times, but could not receive any response from the NADRA. I am sure that here too, his main focus will be on the middle class and poor people who have no say in the power corridors, otherwise he might issued tax demand notices to some powerful buerocrates (civil/uniformed), ploiticians, journalists living beyond their means instead of players. BRAVO Hakeem
Mr. Hakeem will be tough on the poor and will wag his tail with the rich and famous. Mr. Kakeem, you have forgotten what happened with the bakery boy who refused to oblige the daughter of the Chief Minister Mr. Shahbaz Sharif. Your days at the top is numbered if u dared to stamp your authority against the rich and famous.
How to file tax return if the org is tax free and does not have NTN? atleast the penalty should be 50% of wealth
I stand behind Mr. Ali Arshad Hakeem.
The tax evaders should not be allowed to roam freely.
Pakistan is taking load from the World Bank and the IMF and the tax evaders are buying properties in foreign countries.
Unless evasion of tax will not be made non-bailable offense, it may be difficult to take out the wealth from the stomach of the tax evaders.
The entire system of the country needs overhauling. It must be made transparent as who is earning what and where he or she is spending.
And this cannot be done unless Mr. Ali Arshad Hakeem introduce the 'receipt culture' in the country.
A person who buy anything must produce his or her CNIC while purchasing any thing whether big or small from the market and the seller should issue a receipt with the CNIC number written on the receipt.
The duplicate copy of the receipt should be forwarded to the Income Tax Authorities so that the Government should know as who is earning what and spending how much in a month.
I recall in the late 90's when the then government listed the name of loan defaulters , some fellow Pakistani students in my university proudly shared their family names which appeared on the list. Shaming and naming them will not work only thing that will work is to penalize them and jail them . Our morals have hit rock bottom and only the threat of jail time will motivate tax dodgers to pay up.
Clean up your house first and then go after the tax evaders, there should be no amnesty for those who has willfully evaded the taxes and above all lets not forget that it is the FBR employees who are in cahoots with these tax evaders. It is as simple as that in Pakistan, look around you Mr.Hakeem in your own department, that is where the cancer lies and spreading.By the way start from the President and PM Houses.
Less than 25,000 taxpayers in Pakistan pay 85% taxes. So what do the 28,000 FBR staff do? FBR has become dysfunctional
Make it so.
10 week amnesty?
Nawaz sharif should hurry and avail!