Tax talk

US Secretary of State Hillary Clinton and the European Union are finally saying what we’ve known for decades: our tax collection is abysmal and allows the wealthy to dodge paying their share of taxes. The industralised world seems to have had enough. They have told us that outside aid will only be forthcoming if we are first willing to help ourselves.  Here are the stark facts: less than two per cent of the country pays taxes and our tax-to-GDP ratio is one of the lowest in the world. The agricultural sector is exempt from taxation while industrial barons bribe their way out of paying their dues.

In the last decade, there have been a few successful attempts to widen the tax net. The imposition of a General Sales Tax forced traders to document their earnings and there were some attempts at accountability within the Federal Board of Revenue. Clearly, these piecemeal measures weren’t enough. Stricter punishments need to be put into place and enforced, against those who don’t pay their taxes and those who facilitate evasion. But salaried employees, who bear the major burden because their taxes are deducted at the source, are angry that the revenue they provide to the government is used for the enrichment of politicos and not the general welfare. Simply increasing revenue collection will not be enough. This apathy needs to be eradicated with transparency in government spending.

Right now, foreign governments and the salaried middle class are subsidising the luxurious existence of the elite. The former has had enough. The next time Pakistan suffers a natural disaster, defaults on its loans or uses the Taliban menace to try to get the US to cough up some more money, we may just be rebuffed.  And given our inability and refusal to get rich citizens to contribute, that refusal would be justified.

Published in The Express Tribune, October 16^th, 2010.