By Muhammad Zahid Rifat
What any one will say on being told that in a country with an estimated population of more than 190 million people, only 0.7 million, or may be still lesser, had filed the income-tax returns this year ?
Quite obviously, the response would be quite disappointing and wishing that the performance of the agencies concerned should have been much better than this in order to build a strong national economy and keep it moving onward in a progressive and forward-looking manner. At the same time, one would also wish that the people, who fall into bracket of tax-payers with taxable income, would be filing their tax returns honestly and sincerely considering it as their national obligation as well as a tool to ensure that with their tax money the government, whosoever was in power, would be providing basic amenities and facilities to the people at large both in the urban and rural areas.
Documentation of national economy has been there at least on the papers for quite some time but still it was far from being enforced and implemented mainly due to lack of political will and commitment of those treading the corridors of powers, irrespective of their political affiliations as such. This was another victim of vested interests who were strong, influential and powerful enough to dictate things and continue calling the shorts, no matter which government was in power.
Needless to say that strong and growing national economy meant that the country was strong to a great extent in terms of security and defence despite facing many internal and external challenges like militancy, extremism etc. Due to lack of documentation, the national economy was considerably weak as a result of which Pakistan could not see eye to eye with its hostile though apparently friendly neighboring country of India.
Every time Pakistan goes to International Monetary Fund (IMF), World Bank and other donor agencies for more assistance and help, they bluntly point out lack of documentation of national economy and ask Pakistan Government to do more and more in this regard and set its own home in order first.
Due to absolute lack of documentation of national economy, number of tax-payers was declining over the years instead of showing some appreciable increase in line with the tall claims of Federal Finance Minister Senator Ishaq Dar. According to latest figures, about 0.7 million tax-payers had filed their income-tax returns this year. Only last year, the number of income-tax filers was around 0.850 million. Those filing income-tax returns with the Federal Revenue Board (FBR) mainly comprised the corporate sector and the employees of the Federal and Provincial Governments which numbered about 2.2 million and whose income-tax was deducted at source by the employers
This figure of about 0.7 million income-tax payers , as mentioned above, was indeed a very sad reflection on the performance of the FBR , which was the main tax-generating and collecting agency, and more importantly on the Federal Government of PML (N) which seemed to be failing in attaching due importance to the national economy related issues, what to talk about setting out priorities relating to the economic issues confronting the nation and the country and taking concrete measures for tackling these in such a manner that the country may seem to be moving forward on economic front and the donors should also be happy and satisfied in this regard.
In fact, on coming into power or even bit afterwards, the PML(N) Federal Government should have taken all its allies and others on board, discussed and deliberated at length the national economic issues and on the basis os detailed deliberations, comprehensive and effective policies should have been formulated for tackling these issues on priority basis with a firm determination , commitment and political will to implement so formulated policies, no matter if the Federal Government and its Chartered Accountant Finance Minister had to swallow some bitter pills here and there in the national interest much over and above the vested self-interests.
This was not all. Some economists were of the considered opinion that if the number of income- tax return filers had declined during the previous Peoples Party government then it would not have been much surprising because the PPP government had never made any claims of having any interest in working on the economic front. They pointedly stated further that that over the years, whenever Peoples Party had come into power, the country and the national economy had suffered adversely every time, be it the nationalization policy of Zulfikar Ali Bhutto or the tenure of Asif Ali Zardari, the people at large had not benefitted from many issues .
They went on to point out that contrary to this, the PML(N) had all these years been claiming of forming economic reforms agendas and understood these issues as well. But somehow the present PML(N) government of Prime Minister Nawaz Sharif had not so far been able to come out with any appreciable performance on the economic front so far.
They also opined that any claim to have cut down POL products prices continuously for months of November and December 2014 could not be given to the present government on the whole as such. This “laudable achievement” in very crude manner was due to noticeable decrease in the oil prices in the international market mainly though the pressure regarding various issue concerning the people by the rather very long sit-ins in Islamabad of Pakistan Tehrik-e-Insaaf (PTI) and Pakistan AwamiTehrik (PAT) led by Imran Khan and DrTahirulQadri respectively. The PAT sit-in had since been called off in November whereas that of PTI was still continuing.
It is generally said and believed that facts and figures speak much louder than any other thing. So, here are some facts and figures showing how and why there had been rapid decline in the number of income-tax returns filers during last few years. These facts and figures gathered from official and other reliable sources would also go a long way to show how documentation of national economy had not been enforced and implemented as forcefully, vigorously and effectively as this should have been .done in order to build up a strong economy as demanded and required by the national interests to keep trying to build an equitable tax system which could help in turning major part of the informal economy into formal economy which in turn would help in improving ratio of taxes viz a viz Gross Domestic Product (GDP) .
It was a matter of record that as many as 600000 taxpayers had mysteriously disappeared from the tax net in just one year which reflected on incompetence and mismanagement of the country’s top level machinery. According to the Federal Bureau of Revenue (FBR) submission out of tax-payers number of 1.44 million for 2011-12 who were paying tax regularly 856983 could be traced at their homes and work places and 583013 tax payers could not be traced. This was revealed when FBR tried to locate the tax-payers at their given homes/ work places with the helpof NADRA.
And as per facts and figures submitted in the Senate in December 2012, number of tax-payers in the country had shrunk to almost half over a period of three years, 0,81 million had filed tax returns for financial year 2011-12 though higher number of more than 3.3 people were possessing National Tax Number (NTN). It was submitted that 1.6 million had filed income-tax returns for 1009-10, which came down to 1.5 million in 2010-11 and had slumpedto 0.81 million 2011-12.
As many as 7.5 million people across the country were reported to be well to do but they were not paying taxes. Significant segment of the national economy remained undocumented.
Besides those who were not paying taxes though quite eligible for that, there were also those industrialists, feudal lords and influential people and well-connected people whose were enjoying tax exemptions, somehow or the other, to the staggering figure of as high as Rs 478 million. A senior economist, who had since retired after serving as the Chief Economist of the Planning Commission Dr Pervez Tahir, was some time back reported to have remarked that every SRO (Statutory Regulatory Order) was issued on the pressure of vested interests and influential people. This was yet another sad reflection on the Federal Government’s more or less absolute lack of political will. In short, the eligible tax-payers were not willing to pay taxes and contribute towards documentation of the national economy and the Federal Government, irrespective of its being elected civilian government or the army dictatorship, was never in a mood to enforce the political will, if at all it had some, to go flat out for documentation of national economy.
And to conclude, it was worth mentioning that while only 0.6 per cent of population was paying taxes in Pakistan, the ratio was 4.7 per cent in India, 58 per cent in France and still higher at 80 per cent in Canada.
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