Indispensable measures
Shakir Lakhani
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 Kasam 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 (Peshawer) 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.
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 waster 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 sky-rocketing 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.
https://dailytimes.com.pk/346542/indispensable-measures/
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