Flood tax: Leave us alone, go catch tax evaders

Published: October 5, 2010
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Pakistan is facing pressure to raise money to pay for post-flood rehabilitation. PHOTO: REUTERS

So far Pakistan’s economic loss due to the massive flooding is calculated to be$43 billion. This is equivalent to one fourth of the total GDP  which today stands at $170 billion.

For Pakistan, where financing the state, military and debt costs more than what we earn, such an enormous loss to the country’s economy has left everyones mouth agape. And it seems that due to the recent economic losses incurred, the dream of increased spending on human development is far from materializing.

There is a dire need of funds to finance the relief and rehabilitation work keeping in view that the tax-to-GDP ratio is barely hitting 10 per cent and the current account deficit is 6.3 per cent. The government has yet again sought an easy way out i.e. taxing the existing taxpayer who is already under immense distress due to the unjust taxation system prevailing in the country.

Four proposals have so far been under consideration which include a 10 per cent flood surcharge on income, increased duty on the imported items including basic commodities, taxing the urban property owners and an increase in the GST.

So on one hand, taxing all those who are already heavily taxed and in return gifting them with inflation by higher GST and import duties is like punishing the taxpayers as if they were responsible for swelled rivers, breached dykes and IDP’s deaths at camps.

To the contrary, the government is in no mood to capitalize on this opportunity to bag public support and initiate an action against all those evading taxes or to remove lacunae in the taxation system. If these steps are taken government could earn far more  income on permanent basis than the projected amount to be received via the flood taxation proposals.

If with  stroke of a pen 10 per cent surcharge can be imposed then it doesn’t require rocket science to catch income tax evaders by means of checking their expenditures on foreign trips, private schooling or expensive cars. Officials at Federal Bureau of Revenue might be knowing far more ways than the one I mentioned, but the presence of will on their part is all it’s going to take.

At this time of crisis it is a collective responsibility to share the burden, passing it on to a few who are already squeezed will only make the matters worse.

Salman Shah Jilani

Salman Shah Jilani

A management undergraduate who blogs at globaldaaira.wordpress.com and chowrangi.com and tweets at @jilani7.

The views expressed by the writer and the reader comments do not necessarily reflect the views and policies of The Express Tribune.

  • http://blogs.tribune.com.pk/story/1979/what-we-dont-know-will-hurt-us/ Syed Nadir El-Edroos

    Lets hope that sanity prevails!Recommend

  • faraz

    Wealth tax should be reintroduced, people having property worth billions dont pay a penny. Recommend

  • Bilal Khan

    By the way, the stats of $43 billion related to flood damage have been proved to be a misunderstanding by the PM. He confused the impact of the war on terror with the cost of floods. The actual figure for the floods is much higher and has yet to be determined.

    As far as taxes, they should tax all income earned by Pakistanis anywhere on earth, much like the United States does with its citizens. Only then will we be able to tax the billions that politicians and industrialists have abroad. Recommend

  • Pseudo

    I give up. There’s no incentive to earn an honest living in this country. If I was a trader, a landowner, a con-artist – I’d be living a happy tax-free life. But no, I’m a salaried individual and as a consequence of my honesty I’ll have to support everyone’s crap.Recommend

  • Ali

    Pseudo i totally agree with you, there is no point being honest and a worker here, its messed upRecommend

  • Amanat ali

    The PPP govt should collect tax from who are involved in tax fraud. There is a tax fraud only in FBR about 5.00 billions while railway, PIA, Steel mills…. my God, No limit So Govt should take strict action to eliminate corruption rather than imposing “Fraud Tax”. Recommend

  • parvez

    You have ended your excellent article with a plea for collective responsibility.
    The people who will decide this will ensure that not only will you pay for this but yours children’s children will be paying for this. The disgusting part is that the real sufferers of the floods will land up worse than what they were and those who decide will be much, much better off.
    No, sanity will not prevail – for those who do not learn from history are doomed to repeat it.Recommend

  • Jahanzeb Awan

    The present government (and all its predecessors) have not, at any stage, even attempted to bring any kind of reforms in the agricultural sector including (but not limited to) bringing the same under the tax net. Furthermore, it appears that the Government is hell-bent to squeeze the existing tax-payer rather than making a serious and consolidated effort to increase the tax net. In the circumstances, it is but natural that any honest, law-abiding and tax-paying citizen would question his/her wisdom to pay any kind of taxes! However, in most cases, such taxes are deducted at source by the respective employers thereby leaving no choice to the said taxpayer whatsoever. The rising inflation only adds insult to the injury (or shall we say grievous bodily harm). Recommend

  • hu

    It is no surprise that the government’s lack of any financial sense whatsoever has once again created a nonsensical and ineffective policy. It’s sickening that this supposed government taxes the very people who are creating growth and then hinders the trickle down effect by taxing them more. I suggest budgets should be cut across the board; most of our ministers enjoy numerous cars, massive allowances & and benefits as well as overinflated numbers of staff. Imagine if every government official was asked to just give up ONE car to pay for the flood victims…wouldnt that be inspiring as well as more effective? And what a great image it would give to the leaders. No, our government would much rather spend Rs 11.5 bn on food amidst other completely illogical expenses. Flood tax my ass, this money is going to make sure the powers that be can enjoy quality room service in their five star suites every time they decide to take a trip at the drop of a hat. Our current sports minister for example has flown to New delhi to settle a minor squabble which could very easily be settled over the telephone. There is no such concept as collective responsibility…just collective stupidity.

    For once, let’s not be stupid and make our voices heard.Recommend