How to fix the tax problem

[CLIPPER4LIFE]

FBR and its importance​

express news By Farooq Tirmizi

If the Federal Board of Revenue is to be successful in its drive against tax evasion, it must understand one simple fact: its job is not to be the business community’s friend. The FBR must be a businessman’s worst nightmare.
It is a concept that seems to elude the government: it is neither illegal nor immoral for the government to use coercive force to collect taxes. Indeed, the very definition of a modern state is one that has a monopoly on the use of force within its jurisdiction, collects taxes from its citizens and offers services in return.
Most people who admit to being tax thieves argue that since the government of Pakistan is poor at providing services, it has no right to ask its citizens to pay any taxes. Others who actually do pay their taxes argue that they are overtaxed and that other people should be asked to pay more taxes.
Both arguments are bunk. Tax rates in Pakistan are reasonable and far lower than they should be considering how few people are actually eligible to pay taxes. And tax evaders have absolutely no right to complain about any lack of services. You get what you pay for, and people who do not pay anything should not be shocked when they get nothing.
But if the country is to move forward, this vicious cycle must end somehow. The government cannot expect citizens to have an epiphany that paying taxes is their civic duty. Even if the government were to begin offering first world services, hardly anyone would voluntarily start paying their taxes.
What is probably ideal is a carrot and stick approach: get brutal with tax evaders but then also make sure to facilitate people who do pay their taxes.
Make sure to reward good behaviour
The FBR estimates tax evasion to be equal to 44.1 per cent of all taxes currently part of the law. This amount comes to Rs1,270 billion rupees, which is equal to 8 per cent of the total size of the economy. Crucially, it is also almost equal to the fiscal deficit, which is expected to be Rs1,350 billion this year. In other words, 94 per cent of fiscal deficit in Pakistan could be erased through efficient tax collection.
While there may be merit to removing exemptions from sectors that currently enjoy them, what is equally necessary is tax machinery that is efficient and capable of collecting whatever the government levies. This requires a two-tiered crackdown.
The first crackdown starts within the ranks of the tax authorities to weed out the corrupt elements without whose help most evasion would not be possible. The second should be on actual evaders.
For the FBR to become a more efficient authority, three things need to happen: its collection processes need to be automated so that they become easier to track. Secondly, the authority needs to pay its officers better. And lastly, the government needs to simplify the process of paying taxes. All of these are interlinked.
In the past, the government has tried automation but was vehemently opposed by FBR officials themselves. This is because many of them derive much of their actual income from soliciting bribes in exchange for looking the other way while wealthy individuals and businesses avoid their tax obligations.
The finance minister would do well to show some political courage in this matter and force the FBR to accept the automation drive, if for no other reason that it would improve the efficiency of the refund system which would take away the single biggest argument most businesses have against the FBR.
Paying taxes in Pakistan is currently a pain. According to the World Bank’s study on the issue, an average business needs to make 47 payments a year (compared to an average of 14 in developed economies), a process which takes an average of 560 man-hours (compared to 200 hours in the OECD). The country ranks 145th in the world in terms of ease of paying taxes.
If the government were to simplify and automate the process of paying taxes, it would remove many of the complaints of taxpayers and reduce the workforce required to man the FBR, which in turn could then afford to pay its employees more.
There are several examples of organisations within the Pakistani government which raised the salaries of their employees and saw a reduction in corruption and an increase in efficiency. This is not just a hypothetical example from other parts of the world. It has worked even here.
One thing is clear, however. No government office can work well so long as it is manned by officers of the Civil Service of Pakistan. Only when each department is allowed to hire independently will we have bureaucrats who actually care about doing their job rather than building up their privileges.
Once the government has cleaned its own house, it get then get to the serious business of collecting taxes.
To make an omelette, first break some eggs
The government’s timid approach towards mounting a crackdown on tax evasion gets frustrating. There have been reports of some authorities hiring eunuchs to shame people into paying their taxes. Given the fact that most Pakistanis are completely shameless about their economic morality, that approach is unlikely to work very well.
The government, instead ,should try a more physically intimidating approach. If a few doors need to be broken down in the middle of the night and a few thieving business tycoons need to be dragged out of their beds by armed policemen kicking and screaming in front of their mothers, wives and children, then so be it. The IRS is not scared to do it.
The government is perfectly within its rights to use such coercive tactics. It would not even need to do this with every person who does not pay their taxes. But a few unannounced raids on the most prominent and egregious of violators should go a long way towards sending the message that anyone could be next.
The acronym “FBR” must become simultaneously the most feared and reviled name in the country. Pakistan must acquire its equivalent of the American saying about the famous 1920s Chicago gangster, Al Capone: “He got away with murder, but they got him for taxes.”

 

[Pioneerfirst]

this problem can be solved by the documentation of whole economy,curbing smuggling from afghanistan and bringing the untaxed sector like agriculture and transaporation in tax net.Corruption in FBR and our powerful law makers is one of the biggest hurdle.
Pakistan should gain a tax to GDP ratio of 17% as of india and other developing countries.

 

[CLIPPER4LIFE]

this problem can be solved by the documentation of whole economy,curbing smuggling from afghanistan and bringing the untaxed sector like agriculture and transaporation in tax net.Corruption in FBR and our powerful law makers is one of the biggest hurdle.
Pakistan should gain a tax to GDP ratio of 17% as of india and other developing countries.

The only prblem is that many poor peole say that taxing them affects them

 

[LEGENDARY WARRIOR]

HOW TO FIX THE TAX PROBLEM

The same way cricket match is FIXED. .

 

[Raza88]

An estimated 80% of the population of Pakistan now has NADRA cards so bringing people into the tax net shouldnt be much of a problem provided there is a sincere effort

 

[RazorMC]

People can be taxed more effectively if the economy is well documented. People who are emplyed in firms have taxes deducted directly from their pay. Many businesses, however, evade taxation by not declaring their earnings and buying smuggled goods that come via Afghanistan.

The government should check the supply-list of the manufacturers so they can get a good estimate of how much the retail sector sells and earns.

Our judicial system is too slow to hand out judgement on time. Once we can address this issue and also get corrupt officials out, then we can start to see results.

 

[Last Hope]

As per my view, pay more tax, increase rates and demand payment!
This would increase the government's finance, and after it is enough, decrease the rates to a certain level, fix it for ever, and demand payment by each and every person, be President, minister or a middle class family.

This would increase the government's finance and would give enough to spend of Infrastructure development and other development projects, but we need to have sincere anf loyal men in government.

 

[AZADPAKISTAN2009]

Confiscate properly and cars, and start cleaning out BANK accounts !!! like they do in USA you don't pay tax , govern takes money from your bank account when ever they want ... you get salary they stop your salary

 

[AZADPAKISTAN2009]

On a realtistic note, people who have income less then 7,000 rupees should not pay tax , rest should pay taxes.

And , sales tax should be imposted 2%-5% on goods.

All businesses should have a tax number - and if you don't pay taxes your business registration is cancelled and you can't open bank accounts

Tax should be imposed on electricity
Tax should be imposed on petrol , gas
Tax should be imposed on Water


All member of parliment shoudl declare their assets , including assets which have been owned under sposes name
or kid's name

 

[Thorough Pro]

this problem can be solved by the documentation of whole economy,curbing smuggling from afghanistan and bringing the untaxed sector like agriculture and transaporation in tax net.Corruption in FBR and our powerful law makers is one of the biggest hurdle.
Pakistan should gain a tax to GDP ratio of 17% as of india and other developing countries.

This problem can only be solved firstly by getting rid of the black sheep within the FBR itself, and secondly by selecting just a few 2/3 tax evaders each year and screwing really hard to make an example out of them for the others to see. thirdly sales tax MUST be levied on each and every product and service excluding life saving medicines, basic unprocessed and some essential processed food items. Agriculture should also be taxed just like any other product or service.

It is the responsibility of the whole country/economy to contribute to exchecure, this will not only increase tax collection manyfolds but also would enable the government to spend on social sector. When everuy one contributes, the burden on individuals can be reduced by lowering tax rates.

But first of all the government should have a well thought out direction, plan and then the will.

 

[AZADPAKISTAN2009]

Problem lies with the administrators , people who make the policies (politicians) are the biggest hurdle in passing legislation to punish tax evadors

 

[AZADPAKISTAN2009]

As far as my understanding , the current system lacks

a) Ability to monitor bank accounts for people
b) Ability to confiscated money from banks if person has not paid taxes
c) Ability to determine who has paid what amount
d) Ability to track if a politician puts his mercedez under his wife's name or hides his income in UK account

Businesses take hard cash (money) if it was debit card based system , then its easier to track the sales tax owed by business like resturant

Pakistani business man can just take cash , and by pass any calculations , and hide it in a bank account under spouse's name etc

Unless , the bank money is tracked , who makes what its difficult process.

70% of the business in pakistan's vegetable markets is done hard cash , its hard to track real income for these folks

Similarly people like bus drivers, taxi drivers etc they all make unlimited amount with out paying anything to government

Plus the police of course takes their 10% cut from them too

 

[RazorMC]

Money or property under the ownership of a woman is not taxed. This is just one law that crooks exploit.
Our PM allegedly has huge loans cancelled, all under his wife's name to save himself from disgrace.

Another solution could be to limit the highest denomination to Rs.100 only. People dealing in cash would need large numbers of bank ntoes for their corrupt practices and their ill gotten gains will be harder to hide.

Business to business transactions should be done via a Bank account or by cheque, to declare the actual amount to the FBR.

 

[AZADPAKISTAN2009]

Well our care takers of the law , are currupt , politicians themselves do not pass laws that bring in "clearity" and justice , becasue they know if that happens

a) Politicians will not be able to take big loans from Banks
b) Politicians will not able to award land for cheap prize
c) They will not get tax , discounts from their busienss income
d) They will not have to declare their income

The problem is our Parliment Hall !!!


Choor to hain hai gov officials

I mean , they get Free car, free daily allowance , 2 lakh pakistan rupees / day ( per day ) just for water and other expense, can you imagine their salaries????


They will not bring in any law !!! in power that will make them pay taxes!!!

When the AID money comes in from Unicef, world bank , or other countries the politicians are sitting - in all community posts , where they control AID money .. and all the million dollar projects coming in from world economic banks end up in politicians pockets

 

[DesiGuy]

How to fix the tax problem


stop paying taxes........