The first thing is to direct the FBR not to harass existing honest taxpayers (filers). They have been paying taxes for years while the tax evaders have grown rich beyond belief. Recently, Karachi businessman Siraj Kassam Teli told the Finance Minister that if the FBR is disbanded, he would guarantee an increase in revenue collection of fifteen percent. I believe that the FBR should not be disbanded; it should be asked to recover taxes from the millions who do not pay taxes. In fact, tax evaders should be given exemplary punishment to deter others from cheating the government.
The first category of tax evaders are the smugglers. They are so confident of their strength that they proudly say “If a tax man comes here, he will go back a dead man”. They can be found in the thousands in the Karkhano Market in Hayatabad (Peshawar) as well as the many “bara” markets in upscale localities of every city in the country. By recovering taxes from smugglers, the government can earn billions every year. A campaign (similar to the one on dams) should be launched in the media to convince people not to buy smuggled items like electronic items, cloth and crockery. Every time a citizen buys a smuggled item, the nation loses. This will go a long way in teaching people the evil that smugglers do.
The second kind of evaders is those who deal and speculate in real estate. These enterprising citizens have driven property prices sky-high, so much that the common man can no longer buy a house. About Rs. seven trillion in black money has been parked in this sector. Whenever a property changes hands, the FBR should levy taxes on the “real” value of properties instead of “declared” value (which is usually only a tenth of the real value). If a buyer does not agree, the FBR should exercise its power to stop the sale and auction off the disputed property. Again, the annual revenue will be in the hundred billions.
To reduce or eliminate corruption, the high denomination currency notes and prize bonds should be demonetized. It’s so much easier to carry high-denomination notes and prize bonds that people prefer to use them for paying bribes. Only Rs. 1,000 notes and prize bonds should be retained.
A campaign (similar to the one on dams) should be launched in the media to convince people not to buy smuggled items. Every time a citizen buys a smuggled item, the nation loses. This will go a long way in teaching people the evil that smugglers do
The additional tax on non-filers should be increased to one percent. Again, this will tremendously increase government tax collection, besides inducing them to register themselves with the tax department.
Presently the agriculturists in the country enjoy virtual immunity from taxes. Not only this, they pay a pittance for the water they use for farming. Our sugar industry is the biggest waste of water, using up to 7,000 kg of water to produce one kg of sugar (compared to the international usage of 2,000 kg of water for one kg of sugar). The sugar barons have been looting the country for years, now they should be made to pay income tax like everyone else in the country. They should also be asked to pay water charges to reduce wastage.
Finally, a wealth tax should be imposed on all properties. For some reason, this was discarded a few years back. Such a tax, if levied on the actual value (and not the declared value) will lead to a big increase in tax revenue. To penalize the non-filers, they should be made to pay twice the amount levied on tax-payers. There should either be no wealth tax on houses owned by the poor and widows, or only a fraction of the tax levied on others.
I firmly believe that if these measures are implemented, the government can provide much needed relief to the common man, who is groaning under the weight of skyrocketing prices. Imran Khan will of course face a lot of resistance from some of his own ministers, but he should convince them to agree in the national interest.
The writer is an engineer, a former visiting lecturer at NED Engineering College, an industrialist, and has been associated with the petroleum, chemical industries for many years
Published in Daily Times, January 22nd 2019.