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.

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