Don’t Push Me to Pay Tax!


Don’t Push Me to Pay Tax!

Don’t push me to pay income tax – why would I pay anyway? Do I get anything in return? This is a common argument every Pakistani has while discussing the income tax issue. Frankly speaking, only salaried class pays income tax in full, that is because their tax is deducted at source and they simply do not have any option! Rest of the population is either poor and does not fall in the tax payer’s category or evade taxes using loopholes in the system!

 

There is no doubt that Pakistan has one of the lowest tax to GDP ratio in the world with only about 17 million people paying income tax. Last year Finance Minister Abdul Hafeez Sheikh accused the elite class of hampering the broadening of tax net. Only yesterday he claimed focus on bringing 700,000 tax evaders into the tax net.

 

But how about this old saying “leaders must set examples for others!” Contradicting to this, The News reported that Mr Finance Minister’s nomination papers submitted to election commission show a zero tax payment (he was probably unemployed during year ending 2008!). According to the report, his current salary is Rs 594,899 and this year he generously paid an amount of Rs 49,835 of which Rs 23,065 were refunded to him. A total tax income tax of Rs 26,770 was paid by him! I guess this is not an acceptable example, is it?

 

Even our donors have been telling us to increase our revenue by widening the tax net. Some of us would recall Ms. Clinton’s lecture given in September last year at Brussels when she said that “The most important step that Pakistan can take is to pass meaningful reforms that can expand its tax base. I know how difficult it is, but it is absolutely unacceptable for those with means in Pakistan not to be doing their fair share to help their own people.”

 

But perhaps Ms. Clinton needs to understand that in any civilized country citizens pay taxes to run government affairs. In return, the government is responsible for providing security, education, healthcare etc. In case of Pakistan, most of our funds are inappropriately used and the trickle down impact is feeble! It is so disturbing to read that Pakistan is in the league of most corrupt countries. Our national assets such as PIA, Pakistan Railways, Pakistan Steel etc are on ventilator for a long time and instead of turning them as profit making entities, government is using these organizations for welfare by providing job opportunities to few chosen ones!

 

Is it not the responsibility of our government to create an environment where people are encouraged to pay income tax. One must appreciate that the tax net will not increase overnight, but gradually seeing the value of paying income tax, those currently evade, might start paying their liabilities. Moreover, rich and influential people particularly those in politics need to set examples otherwise increasing tax net will remain as a dream!



Hammad Siddiqui

A corporate trainer and passionate blogger qualified from Institute of Organization Management, US Chamber of Commerce.

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  • M.Saeed

    Tax is the essential food for the performances of a government on its promises and good governance is the one that will end once and for all, the use of taxpayer’s funds to build the personal fortunes of the tax collectors and the personal empires of all amoral and degrading activists.

    In a good government, a voter is not asked to compromise his ideals and commitments to his family just and merely for the benefit of political gains of the member he voted to the legislative assemblies. It accepts responsibility and makes sure that, all funds collected as tax from taxpayers are spent responsibly and effectively, and at the same time, ensure that nation’s forces in uniform have everything they need to carry out the responsibilities in protecting and safeguarding the nation against all aggressions and dangers it faces. It needs to demonstrate by its actions that, taxpayer’s money was the only government’s money and it was spent in complete trust and honour.

  • Longphaland

    I can simply laugh at the naivety of Mr. Hammad. He put everything surrounding tax matters so softly. In the end he also advised non tax payer to pay tax and also advised those who are still out of tax net to get into it. I wish to die on this innocence of style. Having lived in Pakistan for so long what makes him to think that his gentle suggestions would do the trick here. I am sorry to write but this is a soaring reality that state of Pakistan not the governments has failed miserably to give its unfortunate citizens any relief whatsoever from the time of its creation. One may argue that its governments who have failed. My response to this would be failures of all governments is the failure of state. I cannot produce the example of any state who start deducting tax from the salaries from the first day of employment, but the day one is jobless this state will let him to die out of hunger and disease. I pay more than Rs. 480,000/ as pure income tax to the state of Pakistan annually but what I get in return is no justice, no security, no law and order, no guarantee to the life of property and life, no water, no gas, no electricity nothing. Was this my sin to be born in Pakistan.If yes then I am the biggest sinister. So in the end it boils down to the fact that this state is a failed state and should perish so that its citizen can be taken up by other countries and I am sure no country will be worse than the state of Pakistan.

  • Anonymous

    This is a complete farce that no one pays taxes in Pakistan. Every single citizen of Pakistan pays its unfair share of taxes. Its called INFLATION. I call it unfair because its taxation without representation. State Banks stated policy says 13 percent inflation. But in reality the rate collates to the federal deficit which runs around 30 percent. So in general, every pakistani already pays 30 percent tax on top of the payroll taxes. Its time for the Govt to trim up its aristocracy!

  • White_cyla

    Recently, I read a news clipping in which the FBR had clarified that since the FM was residing outside Pakistan, he was only liable to “abyana” against his agriculture income. The had further clarified that since his return the FM was not liable to pay Pakistan tax on his Foreign income as the same was not being earned in Pakistan. Surprisingly, these explanations are contrary to statute, a resident person in Pakistan is liable to pay tax on world income. But then “jis ki lathi, os ki bhains”, who is going to ask the FM for tax return or for that matter audit it.

    The fact is that misery of our people is bacuse of lack of trust in the government, a businessman in Faisalabad or any where in Pakistan makes all the exact calculations for zakat and pays it too but not through the Government’s Zakat Fund. A person will pay only few hundred thousand rupees of taxes but will happily pay millions in zakat ….. Why? …. Lack of trust and as you rightly have said … “Do I get anything in return?” …. yes you do:
    - checking at every crossing by police so you would cough out more money to get to your destination;
    - higher electricity because someone forgot to add a new generation project;
    - no gas, because we decided to have a orthopedic surgen to run a ministry for petroleum; and the list goes on …………..

    • Anonymous

      …when businessmen politicians start including GST collected from customers and passed on to FBR as their own tax contribution (without declaring tax on their profits)…. when all the bones are broken you need an orthopedic surgeon to set them up again…..Good fortune that duty to god still exists to get Charity going or bloody revolution would have been round a while back..

      Incidentally, double taxation treaties may exist where FM (or IK playing county cricket abroad ) would have paid tax on income abroad….can’t tax them twice….

  • Shabbir Kazmi

    Hammad Sahib, tax payment capacity is linked with income of people. The rule is every one has to pay tax according to his/her income. Our system has been distorted because of exemptions. Laws are made by assemblies which are dominated by those who have never paid, never pay and will never pay groups. The worst example is tax on income from agriculture. Collection has been dismal because of the influence of feudal lords, who consider themselves above law. Tax collection can’t improve without bringing change in the mind set.

  • Arab_amyn

    you expect them to pay it now hun? vote for imran-no other option.

  • http://twitter.com/ChaiPaniEtc Κ@§ђ!ƒ @ђм@đ ♐

    Tax is levied by powerful on weak – here we all are so powerful ;-)

  • http://twitter.com/ChaiPaniEtc Κ@§ђ!ƒ @ђм@đ ♐

    Tax is levied by powerful on weak – here we all are so powerful ;-)

  • Adnan Manzoor

    Hammad I think there is a lot of disinformation in this blog or rather i would say you did not done your complete research. If Mr. Shaikh’s Annual salary is around 600k, his tax rate is 4.50% which comes to 27000 and add few more allowances, you can expect the tax rate to go up to that amount. (I am assuming he is not doing any other job in this country or dont have any other income sources in this country)..Secondly I think you need to broaden your understanding about Public institutions.. they are never profit centers.. in fact if you read the by-laws of Pak Steel you will find that its a welfare organization with a major aim of supporting other down-the line industries and generate employment..
    So please do your complete research before posting on anything as posting incorrect or emotional information can cause people to make wrong conclusions too easily..
    and I m sure you must be aware that US Supreme Court once declared Income Tax as against human rights. It was later drafted into constitution by FDR during depression era.. Its good that everyone falling in a tax net should pay tax but it is also a fact that rich, all over the world, pay less taxes.. do some research and you will find the same facts or rather read RICH DAD POOR DAD to know how rich can avoid paying taxes… I don’t buy into the argument that paying taxes can turn this country into a goldmine.. no country prospered on its revenue.. see China.. did it progressed because ppl paid taxes? no… industrial progress is one of the key to development and unfortunately the institutions which were created during ZAB era were closed.. Institutions like PICIC, NDFC and other DFIs were considered as essential for growth in this country and it is also because of these institutions that industry grew in this country.. Traditional banks lack the expertise in project finance that is why conventional banks dont finance such industries therefore the overall pace of progress is slow. second source is Capital markets which are entirely under the control of very few.. so i think its not just the government.. there are lot of factors.. and I m sure you know that West did not progressed because of efficient governments, it progressed because people helped themselves..
    about an hour ago · Like

  • Nomanaftab23

    those who can pay tax, they dont pay tax but those who spend their life in a hand to mouth condition they are forced to pay tax. those nations are destroyed nad have a no right to survive where there is severe injustice of every kind…………

  • JShekha

    Forget the Finance Minister. He is only here to enrich his resume. You may not see him once the government leaves. He is part of that list of NRPs who we hear are doing “exceptionally” well in World Bank, ADB, UN etc. Its a sperate matter that they are usually on contracts and never get any (or may be do not go for) permanent jobs. I am sure by now he must have started looking for another assignemnt outside Pakistan. If he fails to get one, the doors of LUMS, IBA or any NPO would open for him. Also he will get some consulting from international institutions funding Paksitan, of course at our cost.

  • Tryme

    yes we are already paying taxes in terms of sky high prices on everything

  • Neelaab

    So what is the thing when you buy a cell phone recharge card for Rs.100 and end up getting only Rs. 75 worth out of it? What are the heavy duty surcharges and extra surcharges you pay on every inflated bill, electric, gas, water? Seems like the hard pressed folks are being indirectly taxed heavily, while the rip-off artists are running away scot-free. First priority must be of getting rid of corruption, and only then could taxes be collected appropriately to be spent on the welfare of the masses. If this doesn’t happen then paying taxes would simply mean supporting the life-styles of the debauch oligarchs, to buy their Swiss chalets, and drive their latest Landcruisers, while the ordinary folks continue to pathetically slip through the tubes.

  • ian

    taxation should be blind as law is. all citizens past certain age should pay specified amount of tax regardless of income

  • Chanmakhna

    This is the main fight going in between Pak Govt composed mainly of tax thieves & a tax snatcher with a common man who is paying taxes directly from his salary & indirectly through the illegally enforced fake inflation. Here in Pakistan a tax payer doesn’t have any legal protection as in the western/developed countries, but a tax thief is fully protected by law. WHY?

  • ali

    Pakistani Public is right..why should pay taxes when we do not get any benefits. We do not work so hard for politicians so that they take our money and put them in swiss accounts or their kids get good education and live lavish life abroad. I think Pakistani politicians do not have any right to ask for tax when they themselves do not pay taxes. Every time when election papers are filled by these politicians we see no taxes and if we do than they compare to nothing.
    I think pakistani people should kicks these corrupt politicians . We see them what they doing but we just close our eyes.

  • Ahsan

    I have a very simple theory on this.

    If you dont pay tax (and are supposed to), you loose your right to anything you expect from the government. Security, basic necessities blah blah … you dont pay tax, i.e. you evade tax

    Sadly, no business man pays tax (Yet makes hugeeeeee profits) … hence I dont see why the govt. should take measures to improve the situation for them atleast.

    Tit for tat you know.

  • shamim akhtar

    I agree with the part that giving incentives to those that are paying tax may be motivating factor for some who are not paying ,but here issue is also whether people who are in tax net are they paying required tax what they are supposed to do ? “big fish” .solution has to be multi pronged and to implement any new programme one has to have credible,committed leadership in power

  • Fahim_babar

    Very Simple it is our responsibility to pay taxes weather we liked it or not and if we link this to current situation that will not be fair as we elected these duffers, corrupt peoples we know this while casting vote. now why we are complaining. if we all stand on the sides and think that some one will do good to our country we are insane there is no someone, everyone has to play there role otherwise noone will get any benefit or relief

  • http://twitter.com/ChaiPaniEtc Κ@§ђ!ƒ @ђм@đ ♐

    If you do not want to pay taxes, then must gain power – otherwise there is no escape :-)

  • Usman Iqbal51

    Agree with comment.Why we people of Islamic Republic of Pakistan should pay tax to Government. As we are already paying Tax in shape on GST on Telephone,Electricity and Gas. Whereas in the business you will get refund or adjusted against the Tax payable. Where the people on whose bills the GST or Tax deducted are not refundable. By paying the Tax to Government, they MUCH TALENTED BUREAUCRATIC AND ELECTED MEMBERS increase their salaries and perks without paying Tax and buy new latest LUXURY cars for them and their kids.

  • Aahd

    I am a mid line manager at a small company, I paid Rs. 54000 as tax for 2010-11. If we consider the minister, based on his tax payment. He would be a on a supervisory post. Poor minister…

  • umer

    my dad paid 265000 income tax last year….and look at the minister its 26K and we cant afford a new car….and minister is in big cars big houses….i guess its high time that we change our minds and my firm believe is Imran Khan is our last hope….

  • Raja Islam

    Is this his annual salary? Seems too low