Ali Arshad Hakeem, appointed as the Federal Board of Revenue (FBR) chief this year, has declared war on some of the country’s worst offenders. And they are not the militants blamed for so many of the country’s woes.
The new tax chief is determined to force the 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.
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.
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 Rs40,000 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) had profiled more than 2 million offenders, detailing their luxury cars and houses, bank accounts and overseas trips. Hakeem 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,” he adds.
Some are sceptical, but the FBR chief is convinced he can achieve the seemingly impossible. “We will eventually get each one of them. We must give people a chance to come and pay their taxes,” said Hakeem.
“It is a computerised system ... We even know what colour shirt he (an offender) was wearing when he got on that flight,” he added.
Hakeem says evaders may have their identity cards suspended, although it was not clear if such action was legal.
The amount of tax collected had been going down in real terms even as the country looks to the West for help.
The FBR had already presented cricketers such as former captains Younus Khan and Shahid Afridi, with a whopping tax bill. But there has been no public demand for wealthy politicians or their millionaire backers to pay up.
History shows that Hakeem faces an uphill battle. Businessman and Pakistan Tehreek-e-Insaf (PTI) leader 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.”
Published in The Express Tribune, November 6th, 2012.
COMMENTS (13)
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ
In 5 years we have had some 2 or 3 Finance Ministers, WHY? because none of them could do their job, as political expediency took preference over national interests. What Sir, makes you think you can do otherwise, when history is against you.
@khurram.. u have to pay taxes in uae n malaysia as well... pay ur taxes n no one freeze ur bank account..
Shame on Mr Hakeem. He is trying to get only Rs 40000. He should get the original amount of tax plus interesr and penality. If they do not pay within one or two wks , he must freeze their accounts and confiscate their properties. That is the way IRS works in USA. I think he should resign from his post and let some body else come forward and do this job. Actually I would advise the FBR what is holding them back to freeze the accounts first and then talk with thesedelinquent tax payers. FBR has the power to take the tax money out from their accounts with out their permission. Why they do not do it. I do not know and Mr hakeem is behaving like a beggar.
Like really? Shaming the most shameless of a shameless nation is going to work? And thats the plan? Everyone's naked in this crowd!
If you are really serious, how about implementing an ASSET-BASED, ASSET-BACKED Taxation policy? How about Implementing a 0.1% Land value tax which if it remains default for 3 years be publicly auctioned off to cover the owed taxes.
@khurram kaleem: Half of Pakistani's make up around 90 million of the total population . I don't think any country can absorb this many angry tax dodgers. I have lived in US and can inform you that IRS can garnish your wages and get access to your bank accounts if one forgets to pay tax to uncle Sam . So yes if the law permits , tax commissioner can order to have some ones account ceased.
Right now we have a problem where citizens do not want to pay taxes and corrupt officials in FBR help the citizens accomplish this task. We can't keep on going with this charade for long. Tax is an obligatory duty and must be paid by all sections of the society.
We have been through this many times before. There is nothing to suggest that this time will be different.
jahangir tareen is an agriculturist .more than 50 percent of his income is tax free .
Only an influence can force tax official to accept his stance .For a normal citizen tax officer consider citizen as prostitute.
thats why no one wants to deal with ITO and POLICE in pakistan .Citizen dont have a protective law.
Already indirect taxes makes takes collection total 10percent of GDP .this figure is 1 percent higher than india.
Pakistan ITO LAWS are unethical ,one sided and there is no space for tax payer unlike other countries.
Regional rates in pakistan are higher unlike in UAE which is a tax free haven.
Half of pakistanis will migrate to UAE and Malaysia as pakistan ITO law are unethical .
who gave the authority to Tax commisioner to cease your Bank account without courts order.No where in the world this is possible
Atleast somebody is willing to do something. I am a regulator tax payer and submit my returns on time too, so hope the same from other too...
About 25,000 taxpayers (corporate + non-corporate) pay approximately 80% of the taxes.This does not speak well for performance of FBR?
Lack of Clarity and Nuisance Value - Anyways, good luck.
This alteration by The Express Tribune removing the word "Islamist" against the "militants" is highly appreciated and unbiased. FBR is the keyest government department to national prosperity and has got experienced officials with powers too, it must go after all the elites (most of whom reside in DHA and other posh localities of Pakistan).
A very hopeful development...I am also impressed by Jehangir Tareen from PTI...he pretty much went out of his way to pay his tax dues, which is a respectable deed for others to emulate.