Dear readers, forgive me. I must apologise. I have tried to ignore it. I've attempted to abstain from ever mentioning it. I even thought of calling in sick in order not to write this column today. I know you are tired to the back teeth reading about it. Yes, I must talk briefly about the now infamous Kerry-Lugar Bill (KLB).
Now before your turn to the sports pages, please bear with me. You see, Kerry-Lugar Bill and the recently dropped National Reconciliation Ordinance (NRO) all boil down to one thing. The answer of which can be found in the recent production of Mama Mia in Karachi: Money, money, money.
The defunct NRO and the KLB are intrinsically linked. One bill was about sheltering our own tax evaders and the greedy corruption of our political elite (you know who you are), whilst the latter is an aid assistance bill by a foreign power, paid for by foreign taxpayers. Hilary Clinton was right on the money, excuse the pun, last week when she took a swipe at our tax evasion.
"The percentage of taxes on GDP is among the lowest in the world…We (the US) tax everything that moves and doesn't move, and that's not what we see in Pakistan," said Ms Clinton. She then went on to offer a dire warning for the future. "You do have 180 million people. Your population is projected to be about 300 million. And I don't know what you're going to do with that kind of challenge." The answer, of course, is that we need to tax more and tax better if we are to provide the children of our country with better schools, hospitals and infrastructure.
Let's look at the statistics for a second. We have 2.2 million registered taxpayers out of a population of 180 million. Of those, only 1.2 million people actually pay tax, out of which 80 per cent are the salaried class. In total, we collect about 11 per cent of our GDP in tax (as compared to 28 per cent in the US and the UK an astonishing 46 per cent, according to HM treasury). Our feudal elite and their farms (you know who you are), which account for about 20 per cent of GDP, are exempt from any income tax at all. According to a recent report in Jang, tax evasion in Pakistan is estimated at Rs500-600 billion per annum. That is the equivalent of almost half of the total tax collection of about Rs1,200 billion during the current fiscal year.
It seems that old adage, that all that's guaranteed in life are death and taxes, doesn't apply to Pakistan. Well, except the death part. With this kind of fiscal black hole, all we can realistically do is accept foreign assistance, whether it is from the IMF or the US. How many of the protestors over the Kerry-Lugar Bill pay tax? Can Nawaz Sharif, the army generals and all members of the MMA honestly tell us that they pay the rightful amount of tax? Either pay tax, or expect to remain slaves of western powers. It's that simple. But we don't like paying tax, do we? Especially our political masters who are addicted to the dollar, euro and yen. Sixty-two years on, our colonial mindset is still alive and well. A recent exchange between our president and a Newsweek reporter attest to this. The reporter asked Mr Zardari if he agreed that things were better, and he launched into a plea that Pakistan needed a $50 billion Marshall Plan. This coming from a man who, according to Aitzaz Ahsan in The New York Times last year, had expenses that "are not from sources of income that be lawfully explained and accounted for."
So for all the protestors of the KLB, perhaps it would be better to direct your anger a little closer to home -- to those people who don't pay tax. Perhaps you might find that you are one of them. And to those who say "why should we pay tax we don't see anything for our money. The politicians just steal it anyway." Well, two wrongs don't make a right. What differentiates you from our corrupt leaders? You are both effectively stealing money from the country's purse. You are no better that our dear politicians. And to our dear political and military masters, may I humbly make a request. Before you go tapping on the window of the gora sahib's car, with begging bowl in hand, could we have full financial disclosure of your taxes?
With rising inflation and growing budget deficit, it is churlish of us to reject the KLB assistance of $1.5 billion a year. And if we care so much about Pakistan's 'sovereignty', and we are so proud and patriotic towards this country we profess to love, there is a simple solution to our financial woes. We must pay our taxes.
Thursday, November 5, 2009
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I agree with much of what you say but I think you have succumbed to the usual prescription of increasing taxes. Why? Why not reduce expenditure? egs.
ReplyDelete1. If The pres and PM stop travelling like they are on a frequent flier program we will save billions.
2. If the VIPs stop living like princes in govt property off govt bills we could save more billions. Let us stop the perks houses cars etc to vips. Which minister in England and US has tehse privileges.
3. If the government stopped the DHA and waste of land through coop houses we could save billions more.
4. If the myriads of usless govt agencies including 50 ministires in Islamabad we could save billions.
5. If only we would stop subsidisign rich people their clubs and otehr forms of entertainment we could dave billions.
6. If we could privatise airports, PIA Wapda etc we could earn billions.
7. If we could sell all the governemtn land in the heart of Islamabad, Lahore, Karachi and otehr cities we could earn billions.
8. If we taxed alcohol instead of allowign mafias to smuggle it we could earn bilions
there are many other areas we could look into for saving money or generating money.
In the current setup increased taxation will only mean more wastage by the VIPs.
Perhaps u should address this.
But good article liked it.
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