Daily Times

After hearing stories of the recent Senate elections being bought with money, the overwhelming majority of Pakistan’s poor and helpless citizens have come to the conclusion that the present system only favours the rich. They no longer have any doubts about the fact that the resources of this country are not meant for them. What has offended them most is the apathy that MPAs have for them and their inaction when it comes to legislating for the benefit of the people. They are aware that most legislation is meant to benefit the indomitable militro-judiciary-civil complex, inept public office holders, greedy businessmen turned politicians and powerful absentee land owners.

In the name of democracy and the Constitution, the elites blatantly usurp the rights of the people and enjoy a lavish life at the expense of taxpayer money. The favourite pastime of these elites is indulgence in self-righteousness, self-praise and infighting to acquire more and more money and power. They are captives of self-interest and victims of self-aggrandisement. The concentration of power and wealth in their hands, coupled with lust for control, frequently give rise to institutional confrontations and civil commotion.

The elite get many tax-free perks and benefits while the poor die of hunger and disease. In response, our esteemed MPA’s use rhetoric to label themselves ‘defenders of democracy’

The issue of grabbing public property and non-payment of taxes by the elites and using money in electioneering is not being widely debated. Members of the elite get many tax-free perks and benefits while the poor die of hunger and disease. In a typical fashion, the members of Parliament have been trying to refute incontrovertible facts by resorting to rhetoric and calling themselves defenders of democracy and the Constitution. How can they deny the fact that the bulk of their taxes is shamelessly wasted on their own luxuries? They enjoy palatial bungalows, fleets of cars, and armies of servants, foreign tours and what not, but pay meagre income tax. Despite clear instances of corruption and misuse of powers, no action is taken against them by any agency or court of law. This has discredited the entire system and people are disillusioned with the present system of governance and dispensation of justice.

Millions who are not chargeable to tax under the income tax law are paying 12 percent advance income tax as prepaid and post-paid mobile subscribers. Funds unlawfully extorted from their hard earned money are spent on the elites — the daily travelling allowances and benefits in kind of members of Parliaments annually run in billions, and on March 7, the Cabinet announced a 71 percent increase in the budget for these expenses. The civil-military-bureaucracy, ministers, state ministers, advisers, senators, MNAs and MPAs together squander billions every year on perks and perquisites alone. Not only this, the elites do not pay a single penny of tax on plots and benefits they receive in utter violation of section 13(11) of the Income Tax Ordinance, 2001 (“the Ordinance”), which says:

“Where, in a tax year, property is transferred or services are provided by an employer to an employee, the amount chargeable to tax to the employee under the head “Salary” for that year shall include the fair market value of the property or services determined at the time the property is transferred or the services are provided, as reduced by any payment made by the employee for the property or services”.

Section 2(22)(c) of the Ordinance defines the words “employment” to include public office holders as well. According to it, employment includes a directorship or any other office involved in the management of a company, a position entitling the holder to a fixed or ascertainable remuneration, or the holding of or acting in any public office.

Section 14(b) of the Ordinance defines ‘services’ to include the provision of any facility and the concept of ‘fair market’ is defined in section 68 as under:

Fair market value — (1) For the purposes of this Ordinance, the fair market value of any property or rent, asset, service, benefit or perquisite at a particular time shall be the price which the property or rent, asset, service, benefit or perquisite would ordinarily fetch on sale or supply in the open market at that time.

(2) The fair market value of any property or rent, asset, service, benefit or perquisite shall be determined without regard to any restriction on transfer or to the fact that it is not otherwise convertible to cash.

(3) Where the price referred to in sub-section (1) is not ordinarily ascertainable, such price may be determined by the Commissioner”.

Section 39(1)(j) of the Ordinance is also attracted which declares the following as income chargeable to tax:

“The fair market value of any benefit, whether convertible to money or not, received in connection with the provision, use or exploitation of property”.

It is worth-mentioning that during the tenure of the PPP government, a former board member wrote a letter to the then Finance Minister that massive tax evasion and loss of revenue had occurred due to non-taxation of benefits given to some powerful elements in violation of law. As expected, no action has been taken on his letter as of today. It is sad to note that elites not only thrive on taxpayers’ money but also blatantly violate tax provisions. The solution is a consolidated pay package for all after deduction of tax instead of tax-free perks and benefits. This will save billions and also bring millions more to national kitty.

The unholy alliance of privileged classes is the main cause of our maladies. What’s worse is that no system of accountability exists that could take them to task. The judiciary and institutions that are supposed to take cognizance and punish them are themselves party to this ugly game.  National Accountability Bureau (NAB) and Federal Board of Revenue (FBR) are least bothered about taking these people to task, because their top brass are also beneficiaries of tax-free benefits. The ruling elites tax the weaker sections of society, but are not paying due taxes on their unprecedented and exorbitant perquisites and benefits, which they should not even get. No such precedent exists in any true democracy.

Like his predecessors, the present Chairman FBR on assuming charge in 2017 pledged to tax three million rich people who never filed tax returns. However, he has been completely unsuccessful. He has thus, failed to convince citizens that FBR means business and nobody is above the law. Since the rich and mighty are not taxed, the common people argue as to why they should discharge their tax obligations, especially when the state has failed to protect their lives and property, what to talk of providing basic facilities like education, health, housing and transportation.

The writer, Advocate Supreme Court, is Adjunct Faculty at Lahore University of Management Sciences (LUMS). Email: ikram@huzaimaikram.com; Twitter: @drikramulhaq

Published in Daily Times, March 11^th 2018.