After miserably failing to increase the tax base in Pakistan from the shameful 0.5 percent in almost five years, the FBR is now trying to muscle in on the tax revenue of other departments. The FBR is supposed to be Pakistan’s premier organization, because if a government does not know how to collect tax, then they are not a government.

Tax collection should be the second highest priority, next to security, for any government. Unfortunately for the current PPP led government, tax collection is not even considered their responsibility.

In Pakistan the government only taxes 0.5 percent of the total population, with a very secure process and which has an excellent paper trail to account for all the areas of the society for taxes. The data generated from this process allows the government to monitor even the grey areas of the tax system, thus helping to increase the tax base and also to monitor the entire society’s tax payments.

The Government of Pakistan is instead concentrating on collecting taxes from other streams of revenue, which do not have a very good paper trail and data for its tax collections. These include taxes collected on all kinds of fuels, cigarettes, toll charges, mobile cards, gas and electric units etc. Since there is no indication or data for the amount of tax collected from these sources, it is much easier to steal or divert funds from these revenue streams to the personal accounts or secret “slush” accounts.

Proper tax collection via yearly returns is also important for maintaining a strong democratic government. Property tax collection gives the country a steady stream of revenue from its own internal sources and the country does not have to rely on foreign funds required to undertake infrastructure projects or to run the country.

A strong tax collection also helps weed out the dirty elements of the society. In the 1940’s one of the most notorious and powerful gangster Al-Capone, was put in jail for tax evasion charges. This gangster was so strong that the police could not find any evidence against him or anyone to testify against him and in the end he was put in jail on tax evasion charges.

Similarly, a strong tax system in Pakistan can weed out the people involved in terrorist or criminal activities, as these people won’t be able to utilize any of their illegal funds without raising suspicion from the authorities. Instead of closing down cell phone services and motor bikes riding, Rehman Malik could jump into this cauldron as it badly needs a knight in shining amour (which he mostly presumes he is).

Therefore it is in the interest of the government of Pakistan in maintaining peace in this region to ensure that a strong tax return process is in place. It is in the interest of the Army to stop external influence in the government, to ensure that a strong tax system is in place to minimize the need for foreign funds. It is in the interest of the people of Pakistan to avoid terrorism and reduce criminal activities in their cities by ensuring a strong tax system is in place.

Then why is the FBR not doing its job and setting up strict policies to catch the big fish that do not pay taxes? But then again the question of corruption will start. Why then is the FBR not helping table a bill for severe punishment to people who don’t pay their legal taxes and Zakat? Why then is the minister for FBR not asking for a set of laws that will make it mandatory by punishment, for restaurants, hospitals and schools to record customer NIC data and payments data and provide them to FBR on weekly basis (via online upload)?

The reasons for this might be that the FBR and the Government of Pakistan do not see the ‘big picture’. They do not know the benefits of the yearly tax return system and they do not realize that every decade or so the democratic government is taken over by the military, just because they do not have a strong tax system to generate strong internal revenue and avoid influences from external sources which generally result in a clash of the government with the army, which results in many years of military rule in Pakistan. You would think that after more than 50 years the people would have learnt this lesson.


Peshawar, November 16.