Tax Evasion and Reform

[iPhone]

I've said this before, too. It's the elite and little lower then them, the rich, who aren't paying taxes at all. They implement a tax law and throw the poor and middle class into the grinder while these assholes rich and the elite stay immune to it.

No doubt this has given birth to every problem that exist in Pakistan including insurgency. But what's worse and even more sad is that these bloody insurgents end up targetting the same poor and middle class people. Never has a suicide bomber exploded in these super rich areas but he sure explodes in Daata Darbar where the poor folks doing a grueling day long labor come to eat a free meal of daal and rooti.

 

[Reaper What You Sow]

When you have people like zardari in power expect them the taxation in reverse direction..that is from GDP to pockets!

I think Pakistan's problems started long before Zardari. It looks like a system which is up for sale to the highest bidder. I really don't think Pakistan could shoot a nuke without an American password prompt.

 

[somebozo]

I think Pakistan's problems started long before Zardari. It looks like a system which is up for sale to the highest bidder. I really don't think Pakistan could shoot a nuke without an American password prompt.

On the contanary, that is the only thing Pakistan can do without american password prompt. For its missles being north korean design and wardheads being chinese. Rest all millitary gear is bugged by americans. Hence all the hoopla hoopla about its nuclear program.

But on the serious side, nukes are for deterence only. Pakistan is seriously not intrested in MAD. Out decision to carry out test after India affirms that.

 

[Ras]

Looks like a South Asian problem..I was checking the wikipedia article on tax as percentage of GDP and BD is even worse than Pakistan at 8.5 and India only some what better at 17.7.

List of countries by tax revenue as percentage of GDP - Wikipedia, the free encyclopedia

 

[Unbeliever]

No, its not a South-Asian problem.

In the USA the richest 5% own more than 58% of all wealth..
meaning inequality is actually worse in the US than in Pakistan..
(on a higher base level though)

it is actually a world-wide phenomenon, worse in some places, a little better in others, really fair almost nowhere.

To give you an idea of world-wide inequality see: Gini coefficient - Wikipedia, the free encyclopedia

 

[Cheetah786]

Cheetah, that is no excuse. Even if there is corruption or waste, it does not apply to the majority of funds collected. Despite all the hype, the percentage of pilfered funds constitutes a minority percentage.

Secondly, if you have issues with people in Islamabad you need to a) vote and b) participate in an action group, engage in peaceful protest or work with people in NGOs and the media to highlight injustices or inefficiencies. You cannot rob the nation of its share by refusing to pay taxes.

If an overseas Pakistani evades taxes in the uk or us by saying that he does not want to fund a wrongful war in Iraq, what do you think would happen to such a person? When you live in a society then you have to comply with its laws. If you cannot comply with the laws then you can either move elsewhere or be prepared to face the consequences of your illegal activities.

Every dime of tax paid in west brings back results for there citizens every million in tax paid in Pakistan brings you more tax collectors willing to cut deals so go ahead persuade me.

Oh i f i have and issue with people in islamabad i can simply change that by not voting for them LOL Thanx for the joke.

Go ahead you are educated tell me a candidate thats not wanted for corruption or robbing from Pakistan and i will vote for Him or her.

This is posted by one of the mebers here proving my point but i am looking forward to reading your responce.
http://www.nytimes.com/2010/07/19/world/asia/19taxes.html?_r=2&pagewanted=2&hp

 

[AZADPAKISTAN2009]

First I would like correct some figures

A new graduate in Pakistan makes
20,000.00 PKR = 234.384 USD / Month

So an experienced person would make 50,000-1,00,00 Lakh rupees by that account

State pays for this luxury
A politician , his salary is something goes to his bank , his dailly allowance , like buying water , driver etc is

150,000.00 PKR = 1,757.88 USD

Remember a DAILY ALLOWANCE is TAX EXEMPT so this much is going in SNAKE'S STOMACH, then we can easily see how much is being stolen just from the politicians
along as each party has 10,000-20,000 members or more ....

Also a point to note , sugar mill owners like Nawaz family declared 1of them paid 1.5 Million dollar in taxes


Then we have vast amout of people in Pakistan that decalare they don't own any property or cars they hide it by naming that under their spouses name or children's name or parents name

Obviously who will go to fuedal lords and collect taxes from them ??

We have a CULTURE of stealing and justifying it as getting even with state unfairness.

1- Taxes should be paid on how much Income you made

2- Taxes should be paid on your net worth % bracket how many
businesses you own , or how much you own in forigne banks

3 - Taxes should be limited on those whose income is less then
7,000 rupees / month


People interested in opening businesses should be ordered to register their businesses as business and put down owner's name (Already done)

They need to start tracking their sales receipst and sales receipts should be made mandatory which have to be deposited monthly to your accountant if you run a business in Pakistan.


People who have a "theeeeela ...like kulfi wala etc or bun kabaab" they obviously don't have resources to collect sales receipt so they should pay a 1 time lump sum fee yearly to get PERMIT


All the luxury items like
> Cosmetics taxes
(Infact it should be banned as all women wear too much)
> Electric generators (Should be banned)



The largest problem is not state its our people

a) They will not pay taxes

b) They will cry foul to pay electricity bill put wires in WAPDA wiring

c) They will happily buy generators run on petrol even if that send money out of
pakistan

d) They will all buy expensive imported items when same can be gained from Pakistan

e) We wait for gov to come fix all our roads or neighbourhood
If 40 homes in neighbourhood came together and they got a local contractor
to fix the neighbourhood streets or painted the grafiti off would it not make
difference

GO SOLAR & PAY TAXES that is the best solution for Pakistan

And jail all the SOB in parliment with Fake degrees

Curruption has to be CURBED @ SCHOOL level , when students will see fairnss in school grading system and examination perhaps then they will appreciate the state more that NO its not bunch of crooks running the country

 

[gowthamraj]

Ha ha in this field also India have a edge

 

[sparklingway]

State pays for this luxury
A politician , his salary is something goes to his bank , his dailly allowance , like buying water , driver etc is

150,000.00 PKR = 1,757.88 USD

Remember a DAILY ALLOWANCE is TAX EXEMPT so this much is going in SNAKE'S STOMACH, then we can easily see how much is being stolen just from the politicians
along as each party has 10,000-20,000 members or more ....

This is neither a parliamentary nor a state legislator's salary or daily allowance. For the sake of objectivity, state facts accurately. I won't bother attaching relevant documents.

Also a point to note , sugar mill owners like Nawaz family declared 1of them paid 1.5 Million dollar in taxes

Nawaz has no sugar mill in his name. Everything was transferred in the name of his daughter, wife and other relatives when he moved to Saudi Arabia. That's why his taxes are usually in four digits.

Then we have vast amout of people in Pakistan that decalare they don't own any property or cars they hide it by naming that under their spouses name or children's name or parents name

You have forgot benami ownership which literally means property in the ownership of an unknown person. It still has legislative approval (dating back to colonial days although it has been repealed in India but problem continues there as well). Centralized Land Documentation has been tested in 2 districts. However, even then property taxes weren't applied using the computerized data.

It's in the interest of our top 10% income group to not have computerized data collection of property (and that includes you and me).

Obviously who will go to fuedal lords and collect taxes from them ??

Thank Justice Taqi Usmani for the re-creation of legislative feudalism in this country.

We have a CULTURE of stealing and justifying it as getting even with state unfairness.

This problem is prevalent in the assertive, vocal, self-righteous and moralist urban upper middle class who claim to be honest urban professionals.

1- Taxes should be paid on how much Income you made

2- Taxes should be paid on your net worth % bracket how many
businesses you own , or how much you own in forigne banks

3 - Taxes should be limited on those whose income is less then
7,000 rupees / month

Minimum annual taxable income is Rs300,000 i.e. Rs. 25,000 per month.

Above that there are tax brackets. Highest bracket is still low at 25%.

They need to start tracking their sales receipst and sales receipts should be made mandatory which have to be deposited monthly to your accountant if you run a business in Pakistan.

People who have a "theeeeela ...like kulfi wala etc or bun kabaab" they obviously don't have resources to collect sales receipt so they should pay a 1 time lump sum fee yearly to get PERMIT

They pay an annual cart permit to municipality and bribe to thulla.

All the luxury items like
> Cosmetics taxes
(Infact it should be banned as all women wear too much)
> Electric generators (Should be banned)

The largest problem is not state its our people

I could not agree more

a) They will not pay taxes

b) They will cry foul to pay electricity bill put wires in WAPDA wiring

c) They will happily buy generators run on petrol even if that send money out of
pakistan

Did you watch the NYT video where the women refuses to pay the water and sewerage bill?

Anybody who does not vote and does not pay taxes should not have the right to demand any public service.

And jail all the SOB in parliment with Fake degrees

Could not agree more.

1Curruption has to be CURBED @ SCHOOL level , when students will see fairnss in school grading system and examination perhaps then they will appreciate the state more that NO its not bunch of crooks running the country

Our schools are undemocratic and teach people the virtues of sycophancy and allegiance to overlords and everybody can get away with saying "pakistan mein sub kuch chalta haI".

 

[AZADPAKISTAN2009]

This is neither a parliamentary nor a state legislator's salary or daily allowance. For the sake of objectivity, state facts accurately. I won't bother attaching relevant documents.



Nawaz has no sugar mill in his name. Everything was transferred in the name of his daughter, wife and other relatives when he moved to Saudi Arabia. That's why his taxes are usually in four digits.



You have forgot benami ownership which literally means property in the ownership of an unknown person. It still has legislative approval (dating back to colonial days although it has been repealed in India but problem continues there as well). Centralized Land Documentation has been tested in 2 districts. However, even then property taxes weren't applied using the computerized data.

It's in the interest of our top 10% income group to not have computerized data collection of property (and that includes you and me).



Thank Justice Taqi Usmani for the re-creation of legislative feudalism in this country.



This problem is prevalent in the assertive, vocal, self-righteous and moralist urban upper middle class who claim to be honest urban professionals.


Minimum annual taxable income is Rs300,000 i.e. Rs. 25,000 per month.

Above that there are tax brackets. Highest bracket is still low at 25%.






They pay an annual cart permit to municipality and bribe to thulla.








I could not agree more


Did you watch the NYT video where the women refuses to pay the water and sewerage bill?

Anybody who does not vote and does not pay taxes should not have the right to demand any public service.



Could not agree more.



Our schools are undemocratic and teach people the virtues of sycophancy and allegiance to overlords and everybody can get away with saying "pakistan mein sub kuch chalta haI".

What I qouted was from Geo TV broad cast where politicians were being asked about their outlandish life styles so I am 100% sure on its correctly , because it was on TV yar This is a first person confirmation I saw that show and the politicians were all sweating when the tv analyst asked them the question

And in the same show they had Nawaz Sharif's relative /brother and he clearified that he paid his taxes and stated that figure ... openly which was great but just goes to show you the gap in our people's life styles.

But for daily allowance for these politicans
I WAS SHOCKED 1,700 USD for water fro politicans 1 person , and for his petrol and daily food no wonder they use fake degree or any means necessary to be in parliment
or be associated with gov or politics

Heck ppl in US get 100 USD consultants for engineering firms daily allowance

I ask anyone a sane person , does a water bottle cost 1,700 USD daily ??
daily we are not even talking about monthly expense we are talking daily expanses !!

General public is drinking Tap Water or water from pipes that are rusting underground laid down 10-20 years ago while politicians are drinking 1,700 USD imported water from glashires ... from Siachen

 

[sparklingway]

Tax-to-GDP ratio​

FBR's waterloo?

Inefficient and corrupt tax apparatus is the root cause of the present scenario​

By Huzaima Bukhari and Dr Ikramul Haq

We face a question at home and abroad, Why Pakistanis do not pay their taxes and how come that tax-to-GDP ratio of the country is one of the lowest in the world? We try to explain a host of reasons for this perplexed situation.

During the fiscal year 2009-10, the Federal Board of Revenue (FBR) failed to meet the tax-to-GDP target of 9.2 percent set by the International Monetary Fund (IMF). It barely achieved 8.9 percent. As usual, lame excuses were given by FBR stating 'the tax-to-GDP ratio could not improve from the previous fiscal year due to lower revenue collection because of the country's fragile economic conditions'.

While addressing members of the Karachi Chamber of Commerce and Industry the other day, chairman FBR did not mention the actual reason that the rich and mighty are not taxed and there is no political will to crack down on the underground economy.

It is tragic that in a country where billions of rupees are made on a daily basis in speculative transactions in real estate and shares, tax-to-GDP ratio is pathetically low. The Government seems least bothered to tax undocumented economy and benami transactions. The mighty sections of society are engaged in these transactions and FBR seems to have no will to tax them.

It exposes the institution's inability to tap the real tax potential of the country, which is not less than Rs. 4000 billion. For example, the definition of business given in the Income Tax Ordinance, 2001 covers 'adventure in the nature of trade' and yet our tax machinery is sitting idle causing colossal loss to the national exchequer by not bringing adventures in the nature of trade in real estate into tax ambit.

Our tax-to-GDP ratio can rise to 20pc in one year if we tax speculative dealings in real estate. This will also help in promoting construction industry as prices of land will come down and bring black economy into the tax net.

Instead of performing its prime duty, that is levying tax where it is due, the FBR is busy in constituting committees to ponder over drafting of tax codes and formulating a long-term national tax policy -- these are the jobs of Parliament. It is clear that the FBR is more eager to do the job of legislators rather than performing its primary function of levying and collecting taxes.

In recent years, many task forces were formed by FBR to suggest measures for improvement in tax-to-GDP ratio. These task forces did not suggest anything practical. Though they were given a mandate to analyse performance of the existing tax system with particular emphasis on broadening the tax base, no valuable study has been produced despite a lot of money being wasted.

The fact remains that we have declining trends in tax-to-GDP ratio. If the present policies continue, we will have to wait for many years more to come up to the level of many developing countries, what to talk of developed ones. This is indeed a sorry state of affairs. The root cause is FBR's unwillingness to do what is its duty and indulgence in activities that fall outside its mandate or domain.

At the end of the five-year Tax Administration Reform Project (TARP), the tax-to-GDP ratio dipped to 8.9 percent from 12 percent before TARP. The borrowed funds of millions of dollars have been ruthlessly wasted. The Standing Committee of Parliament on finance must conduct a thorough probe into the matter and seek the assistance of tax experts to determine the amount of loss caused to national exchequer by the FBR stalwarts during the last two decades, especially re non-collection of taxes where due and illegal exaction when nothing was payable.

Note: The higher ratio for the industrialised countries is primarily due to the higher level of revenue from social security, payroll taxes, corporate taxes and taxes on domestic on consumption while the taxes from international trade and non-tax revenue are lower. In contrast, in the developing countries the major portion of revenue comes from the indirect taxes, particularly the taxes on international trade and domestic consumption, while the direct taxes have a lower share. Pakistan GDP-tax -ratio is even below than Sri Lanka and Thailand, which proves beyond any doubt the failure of fiscal managers and tax collectors.

Despite spending millions on media campaign, FBR could not compel 15-20 million potential taxpayers to file tax declarations by the extended date -- 25 January 2010. The majority of non-filers and under-filers are rich and mighty civil-military high-ups, corrupt politicians and unscrupulous businessmen.

FBR is levying indirect taxes and not imposing progressive taxes -- thus favouring the rich and over-burdening the poor. Indirect taxes are collected from the people but not deposited in government treasury -- courtesy unholy alliance between tax machinery and business community.

Inefficient and corrupt tax apparatus is the root cause of the present scenario. Tax officials persistently and ruthlessly squeeze and penalize existing honest taxpayers while collaborating with tax evaders and avoiders -- massive over and under invoicing is not possible without their criminal culpability.

The small business houses and salaried persons, already heavily taxed through withholding tax mechanism, are victims of their highhandedness. It is high time that the FBR should put its own house in order and tax the rich and mighty tax evaders and avoiders. It must tell the nation through media or submitting a report in Parliament how many high-placed bureaucrats, parliamentarians and businessmen, including their dependents, are paying mobile bills of over Rs50,000 in a year, but not paying any income tax. They must be asked about the sources from where they enjoy a life of luxury whereas the poor are dying of starvation and untreated diseases.

The writers, tax lawyers, are members of Adjunct Faculty of Lahore University of Management Sciences (LUMS).