In a country where an indomitable state oligarchy enjoys unprecedented tax-free perquisites and perks at the expense of taxpayers, what one can expect is fiscal chaos and double talk about loyalty to the state. The self-styled defenders of our ‘national cause’ do little to eliminate naked and brutal forms of exploitation prevalent in society. Despite, it being the command of Article 3 of the Constitution, that state would ensure: “from each according to his ability to each according to his work”. However, they require complete and unquestionable submission from everybody of their ‘authority’ and actions, even if these fall outside their jurisdiction. The elites and pressure groups flout the rule of law with impunity — for them, vulgar ostentation of power and money is essential to prove their importance. In this scenario, the victims and sufferers are the poor and helpless masses.
Nobody is ready to expose the role of predatory elites — militro-judicial-civil complex, businessmen-turned-politicians, absentee land owners and unscrupulous traders — in our politico-economic decay. The unholy alliance between politicians, state functionaries and unscrupulous businessmen is the root cause of our many ills. This includes the illegal flight of capital from the country, leaving the masses in miserable conditions. Billions are lost annually due to this unholy alliance. Since the rich and mighty do not pay due taxes, regressive taxes are imposed; hurting the poor and middle class. On the one hand, Pakistan is a country with one of the lowest tax-to-GDP ratio, and on the other hand, the bulk of collection is wasted mercilessly for non-productive expenses — luxuries of the elites.
Those in power, grab state property under the pretext of rewards and awards and pay no tax on it. The taxes ruthlessly collected from the masses are brazenly spent on their luxuries; palatial bungalows, fleets of cars, army of servants, foreign tours and what not. Due to meagre or non-taxation of luxury and commercial properties e.g. clubs and golf courses, unprecedented exemptions are given to generals, judges and high-ranking civil officials. The narrative that Pakistanis do not pay taxes, popular with analysts, TV anchors, academicians, policymakers and foreign donors, is abhorring — the reality is that the poor are victims of oppressive taxes, whereas the elites are thriving on labour provided by the down-trodden.
Tragically, the citizens whose income falls below taxable limits, under the income tax law are criminally taxed through the withholding tax regime. Funds, extorted from their hard earned money, are plundered and wasted by the ruling elites. The militro-judicial-civil complex, Prime Minister, President, Governors, Chief Ministers, ministers, state ministers, advisers, MNAs and MPAs together squandered billions in the fiscal year 2017-18 on perks, perquisites etc. Not only this, these predatory elites did not pay tax on free or concessionary benefits and plots allotted in utter violation of section 13(11) of the Income Tax Ordinance, 2001, 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”.
Nobody is ready to expose the role of predatory elites — militro-judicial-civil complex, businessmen-turned-politicians, absentee land owners and unscrupulous traders — in our politico-economic decay
It is sad to note that predatory elites have been blatantly violating tax provisions and not paying taxes due on receiving plots, free accommodations and other benefits — all covered in section 13(11) and 39(1)(j) of the Income Tax Ordinance, 2001. The Federal Board of Revenue (FBR) is not at all inclined to tax them — their top notches are also beneficiaries of these advantages. They also show subordination and submission to the political masters as well as to the rich and mighty for self-benefits, of course!
Our elites are not willing to pay taxes on their exorbitant perquisites and benefits; resultantly the burden of taxes is shifted on the weaker sections of society. This is the real dilemma of Pakistan. During the days of Pakistan People’s Party (2008-13), an ex-Member of FBR wrote a letter to then finance minister, Abdul Hafeez Shaikh, that massive tax evasion had occurred due to non-taxation of government property given to high-ranking officials at concessional rates. He took no action and the same was the case when Ishaq Dar took office—one hopes that the new Finance Minister, Asad Umar, and State Minister for Revenue, Hammad Azhar will look into it and take action.
All the previous heads of FBR also remained silent on this issue. The present chairman’s track record shows that he would be least interested to nab the rich and mighty. Occupying key posts in Punjab under Khadim-e-Aala, especially as Chief Secretary, he never bothered to ask the concerned secretary to collect agricultural income tax from the rich absentee landlords or mighty urban property holders. Now as Chairman FBR, the question is if he will nab the 3 million ultra-rich, who live lavishly but do not file income tax returns.
The people voted for Pakistan Tahreek-i-Insaf (PTI) so that they would take the powerful predatory elites and tax cheats to task. Recouping lost revenues worth billions of rupees by the PTI government will certainly convey a loud message to all, that they mean business and nobody is above law. As the mighty sections of society are not paying taxes due from them, the common people argue against discharging their tax obligations. Considering that the state has failed to protect their lives and properties, what to talk of providing the basic facilities of education, healthcare, clean drinking water, housing, transportation etc.
The powerful in the land of pure live in palatial palaces at the expense of taxpayers’ money, while the poor suffer from malnutrition — about 60 million lack basic facilities like clean drinking water, sewerage etc. Not only that the powerful do not pay taxes on the perks and benefits, there exists within a specific group blatant discrimination. For example, judicial allowance of the judges of the Supreme Court and High Courts is exempt, whereas the same is taxable in the hands of the lower judiciary. Does this not call for suo moto action on the touchstone of Article 25 of the Constitution? One hopes in the forthcoming Finance Bill, the government of PTI will take care of this at least!
The writer, Advocate Supreme Court, is Adjunct Faculty at LUMS. Email: [email protected]; Twitter: @drikramulhaq
Published in Daily Times, September 16th 2018.