Daily Times

In order to function a state needs to generate revenue through an effective tax collection system. As a nation we have badly failed to evolve a mechanism for direct taxation where everyone is required to pay according to their income. Where the state acts like a caring mother ( Riyasat Hogi Maa Jaisi ).

Unfortunately in the land of the pure both the taxed and the taxer are insincere to the state as they have their own agendas. At the end of the day common good suffers.

Recently my sister went to the excise and taxation department for payment of car token tax. As she wanted extension for two cars, she was given a run around. Finally, she could get the endorsements after a promise that when she decides to sell her car she will inform the receipt clerk as he was interested in buying her car. It reminded me of a famous saying. ” Went for reduction of namaz but instead landed up with rozas as well”. Since the Muslims are now required to both pray and fast as two essential pillar of faith (Tauheed, Roza, Namaz, Zakat, Haj).

The tragedy is of trust. Pakistanis are the highest charity giving and lowest tax paying nations of the world. It seems that common good is taken seriously but without the involvement of the coercive state apparatus which is more interested in its own welfare than the public at large. This approach has to change. Pakistan is no longer under the Raj. The state is now required to collect revenue to be spent on the people from whom it has been collected not to be used to please Her Majesty or her serfs left behind .

Public money is sacred, those who live off it to must respect the taxpayer but invariably they do not. There is blatant misuse and plunder reducing the filers to the status of ‘Mazloom Fariadi’ (Oppressed Affectees). In USA the war of independence was triggered on the use of revenue, the slogan was; ‘No taxation without representation’. Naturally the colonists wanted to skim of this tax which was unacceptable to the settlers. Under the leadership of George Washington, the Americans picked up arms against the British Monarchy and freedom was won. Today the country has a very effective tax collection system called the Internal Revenue System (IRS). Almost everyone is required to file a return. States also collect income tax while the county is responsible for property tax. There is a simplified taxation system which is transparent as well as fair, there are no individual agendas.

Coming from a family of taxpayers the experience at home has been mixed. My grandfather became a filer around 1940 when his watch business had expanded all over India. When he filed his first return he was welcomed with open arms by the tax authorities in Ludhiana, East Punjab as very few Muslim businessmen operated within the system. In undivided Sub-Continent the last income tax he paid was in the year 1945-46. By August 1947 the family migrated to Pakistan. My father re-established his watch business in Lahore and became a filer in 1948. His experience with the tax authorities was not as pleasant as it was in his home town of Ludhiana before the so called freedom for which he was awarded the coveted ‘Tehreek-e-Pakistan Gold Medal’ as a token of gratitude for his struggle. For upright individuals and honest businessmen like him the environment became very unfriendly in the land of the pure-In 1968 when he was admitted to the hospital fighting for his life my 17 years old elder brother who was a student at Government College at that time appeared on his behalf before the ITO (Income Tax officer) for a hearing. He was maltreated, the ITO refused to accept the medical certificates of my father, threw the file on the floor and imposed tax of Rs. 100,000/- As the amount was massive and totally unjustified appeals took years to settle. Despite hailing from a family of entrepreneurs the experience was so horrifying for him that he decided not to enter in business of any kind.

The tax collection apparatus is coercive on one hand and wasteful on the other. Resources and perks are misused for personal interests. No government should be allowed to spend more than it can collect

Fed-up with the coercive state apparatus my father decided to shut down his business in 1975 and advised his three sons to seek other opportunities, but the agony continued. My mother received notices every year for wealth tax. On appearance I was asked to provide copies of the case as the department had lost the files. It was a case of clear cut harassment and high handedness by the authorities for which no remedy existed for the taxpayer. Instead of a simple request for copies of record they issued notices for hearing to pressurize me into submission. Finally the case went up to the director and upon his intervention, I was let off the hook but only after submitting copies of the returns for the last three years which the department had misplaced.

A few years back an expatriate opened a high end restaurant in Lahore. He ran by the book, he was paying more tax, than all the other restaurants combined in the city. Instead of giving him a medal he was harassed by the Excise and Taxation authorities as it exposed their corruption. He was issued notices on a regular basis till he decided to pack up and go back.

There is total lack of trust. Businessmen usually do not part away easily with their hard earned money, they demand return for what they pay. The tax collection apparatus is coercive on one hand and wasteful on the other. Resources and perks are misused for personal interests. No government should be allowed to spend more than it can collect. Till 1958 when the country was debt free everyone lived within means. Spending borrowed money on non-productive ventures has proven to be disastrous. Today the country has a thriving informal economy, while formal sector is in disarray. The state operates with total disregard to public welfare and consumes with no output, which must change. While my grandfather was respected as a taxpayer before the partition, my father did not receive the same treatment in the land of the pure as he was unwilling to bribe the inspectors. Till today less than 1% of the population is in the income tax net which clearly shows a disconnect between the ruler and the ruled. Astute and honest political leadership has to provide and then steer this connection. Tax should be collected for the state and then spent for public welfare instead of wasting it on coercive collection apparatus which consumes with no output or facilitation to the public. Indeed Shabbar Rizvi Sahib has a tough task to accomplish, but because he has been on both sides, hopes are high that finally the state will start to collect revenue from the people to be spent on them and not consumed by Her Majesty’s servants and serpents.

The writer is Ex-Chairman Pakistan Science Foundation