By Ziad Bashir
Ideally, tax collections are supposed to form up to 40% of a country’s total GDP. For Pakistan, this figure has been approximately a pitiful 10% for almost forever. This is a direct consequence of tax evasion. And who evades their tax?
Zardari? Yes. Prime Minister Gillani? Yes. *A list of other politicians that we love to (rightly) demonize*? Yes, those bas**rds!
BUT also from among us, those with salaries and disposable incomes far exceeding the needs and yet, finding ways to save ourselves from taxes in one way or the other. Of course, I know of some admirable Pakistanis who pay every penny of the tax that is their due, but the fact that the tax Pakistani government manages to collect is such a small share of the total GDP, is proof that many of us or those around us, do not. Why then do we protest the rising fuel prices that the government isn’t able to subsidize for the tax-evading Pakistanis? Why then do we protest about the poor farmer not getting decent procurement prices from the government when the non-poor do not even pay the taxes? If we do not pay the taxes to the government, how would the government pay the farmer even if it had an efficient and effective system in place? (Actually developing an effective system also requires monetary investment from government but since we don’t pay the taxes, the joke’s on us.)
How is there so much tax evasion, you ask?
Actually its tax evasion, as well as tax EXEMPTION that plagues the system. Pakistan’s ambassador to the UN, Abdullah Hussain Haroon recently said in an interview to CBS NEWS that mismanagement and corruption is part of the deal called Asia. And that’s the case here as well. Apart from the irrational tax laws, Pakistan has been unable to even properly document all the property and businesses in this country – to the pleasure of many big guns who benefit from this (for obvious not-so-noble reasons, there is a reluctance to accept tax invoicing of inputs and outputs by manufacturers – generally). The implementation of VAT would have been a step towards taxing THESE undocumented activities and holdings- but we believed the TV instead when they said the poor will have to pay additional tax – but 1) they already do pay additional tax, indirectly, and 2) there is an argument that it would not mean additional tax- in an over-all context (opinions welcomed in the comment section). We are SO gullible that we almost deserve what we get.