Daily Times

Governments impose taxes on their citizens and businesses to raise revenue, which is then used to meet their budgetary demands. The tax collected is then spent on the government and the public, making the country’s business environments conducive to economic growth. Without taxes, administrations or governments will not be able to meet their desired targets and will be unable to meet the demands of their societies. Taxes are crucial because governments collect this money and use it to finance social projects. Also, if a country’s population is not interested in paying taxes, that country might not become a sovereign state as it will not be able to provide enough funds to its armed forces. That’s why tax is vital for the survival of a state other than education and health. Mostly, countries have a tax system in place to pay for the public and the government’s functions. Moreover, countries charge a tax on an individual’s income and on corporate income. Republics often impose wealth taxes, estate taxes, inheritance taxes, property taxes, gift taxes, use taxes, sales taxes, and payroll taxes. Suppose we define tax in an economic term. In that case, we can say that taxation is the transfer of wealth from households or businesses to the government, which has a direct effect and can increase or decrease economic growth and economic welfare.

In Pakistan, the entire system of tax collection is not up to the mark. There are laws and regulations regarding every issue, but more than 80% of the Pakistani people do not pay their taxes. In our country, everyone talks about taxes. Trades or businesses talk about paying too much in taxes. Governments talk about not being able to collect any taxes. According to reports, Pakistan has only 12% of filers in the entire country. So, how can a country with a more than 220 million population develop when only 10 million people are filers? To broaden its tax base, Pakistan needs more filers. If the entire country pays its dues, we could collect twice as much tax as we do currently and spend on public goods efficiently. Most salaried individuals will not even have to pay a lot of tax until or unless they make more than PKR 10 million in a year. On the other hand, businesses know that once they come into the tax net, their profitability will erode, which is one of the major reasons they choose not to declare their incomes. The management or the administration knows these businesses exist as, in order to run them, they need electricity and gas connections. Though, only less than 10 percent of industrial and 2 percent of commercial users with gas connections are legally registered. Also, only 40 percent of these recorded users actually file taxes.

Recently, in a meeting arranged by Lahore Chamber of commerce with the Chairman of FBR (Muhammad Ashfaq Ahmed), the Chairman of Pakistan Hardware Merchant’s Association (Mr. Sultan Mehmood) has highlighted the issue of how small business owners and shopkeepers are being called tax defaulters and tax evaders by the inspectors of FBR. He protested in front of him in a professional way that the garment business community and other small and medium business owners are some of the people who pay their income taxes regularly. Still, they are not getting the respect and appreciation they deserve. If Pakistan is running effectively, it is only because of people like these business owners and vendors who are filers, and FBR is trolling this community without any reason. Instead of pushing newcomers to pay taxes and try as much as people can be included/involved in the tax net, FBR is just keeping an eye on the business community. How a country is going to survive where only a small community pays taxes and the rest of the population doesn’t care about it at all. Talking about the Pakistan Hardware Merchants Association (PHMA), it is the true representative of the Hardware Industry and related businesses all over Pakistan. Mainly, the members are manufacturers, exporters, importers, and traders. To keep you updated, I want to mention that the textile and garments industry shares approximately 42% economy of the country. Moreover, it also organizes International Hardware Exhibitions which renowned exhibitors all around the globe attend. A few of those trade bodies of the country have received appreciation from the Government of Pakistan and worldwide. The new system of FBR (POS) is not the right way to collect funds as its speed is too slow to achieve goals. Also, the FBR is not able to find the right taxpayers, which is why our country is not proceeding on the right path. We can expect billions of US $ as revenue if every bread earner pays their income taxes on time exactly. In this way, as a nation, we can save ourselves from taking a loan on heavy interests from different countries, particularly from IMF. Also, we will not have to obey their tough rules and regulations. These days, the transaction of governments are being made from one party to another. They claim that fair elections should be held in Pakistan. No doubt, it will cost billions of rupees. The chief justice of Pakistan should take serious action against these parties who are demanding fair elections if they are interested. He should ask them how much amount they will donate in this regard. They show off they are the best well-wishers in the country. According to a survey, 95% of them are uneducated and not specialized in a single subject. Even they don’t know the meaning of democracy and politics. At this glance, how Pakistan can make a survival to be welfare state for its nation.

The writer is a senior social & economic analyst and can be reached at figure786@hotmail.com