Corruption and Tax Evasion: The Real Picture

Overview

Corruption is seen in all levels of Pakistani administration. The statement of Chairman NAB Fasi Bukhari that admits corruption happening in the country on a massive scale has annoyed the ministers who have asked for an explanation from NAB regarding this statement.

Another report has surfaced, claiming that 446 members of the Senate and Assemblies have not submitted tax returns. 86 members do not even have a National Tax Number.

In view of this situation who do you think is in a position to be held accountable for evaluation?

The statement from Chairman NAB should not come as a surprise to us. Stating figures of the estimated corruption does not reveal or conceal the fact that corruption is common practice in our country.

We do understand that almost half of our economy is not documented and the remaining half does not impose taxes on big sectors. Valid examples could be of agriculture, stock exchange and real estate. People have made billions in stock exchange and real estate; it is only fair that they contribute a small share to the country.

In previous years our GDP ratio has decreased, even though economy has expanded the only viable explanation is that the sectors to produce revenue are not a part of the taxation net. This means the revenue generated is untapped and is not benefitting the country. There is dire need of review to revise taxation practices.

Immediately after next election new government should sit and redevise taxation strategy.

Industry makes 20% of economy and pays 65% tax. Agriculture sector constitutes 24% of our economy and the contribution is just 1%. Services make up more than 50% but yet their contribution is not more than 17% to the country’s revenues.

When we talk about politicians, there are very few who have their relatives in business. Majority of the politicians are earning through agriculture, which is non-taxable. There is no point in accusing individual politicians of tax evasion when their source of income is non-taxable. The actual need is of the political parties to sit together as a unit and declare an economic emergency. There is need to develop standards and decide upon a benchmark above and below which particular taxation rules follow.

Our basic focus is always sales tax and petroleum levy. These are indirect taxation maneuvers. The worst aspect of this system is that it does not discriminate between rich and poor as a result the poor are oppressed.

Alternatively we need to focus on income tax, custom duty, capital gains taxes and property tax. These are all taxes that bring wealthy people under the grill.

Political parties should constitute a forum in which they should emphasize on finding a solution to fill the void of the deficit of 15 billion dollars. That means everyone has to pay taxes so that only the poor are not put in the furnace.

Moving on to other forms of corruption, the decision of Asghar Khan case and then the issue of no measures taken in effect, don’t you think it is causing encouragement to corrupt entities within the political system?

I respect and agree with the decision but I should also insist that if an issue is being dug up it is only fair to investigate other elections so that realities can be unveiled. However, if that is not practical and bears no constructive fruitful results then it is better to bury the past and work for the future.

When motorway was being constructed people used to say one billion dollar is being wasted. The generations to come will witness this stretch of road change destiny of the country.

The public account committee receives audit objections after many years when there is usually a different administration ruling. The ruling government propagates the objections against opposition, so this report should be produced earlier and the accused evaluated during their term.

Source: “News Night – PTV News – 14 December 2012”. With Sadia Afzal.

 

 

 

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