The biggest tax evaders


LETTER (April 26 2010): Pakistanis may well be the biggest tax-evaders on the planet, and the government can blame no one but itself for this. Transporters hardly pay any tax despite the fact that the number of trucks and buses on the roads goes on increasing. Shopkeepers and traders having a turnover, which is lower than Rs 7.5 million, are exempted from registration with the Sales Tax Department.

This is a big joke, as any businessman can easily get over this hurdle by dividing his premises into three or more compartments and doing business under three or four different names (each with a declared turnover of less than Rs 7.5 million).

In this way, traders with turnovers of over Rs 20 million can remain exempted from payment of sales tax, thus causing massive loss of revenue to the nation. The solution is mandatory registration of all shops and traders. It should be obvious that anyone, who can afford to buy a shop worth millions, can also pay tax. Even many shops selling "Paan" (betel leaves) and cigarettes have higher turnovers than Rs 7.5 million.

Another way to increase revenue is by ending smuggling, under-invoicing and misdeclaration, particularly from China. For this purpose, the FBR should have an arrangement with Chinese Customs Department whereby all export entries filed by Chinese exporters for Afghanistan and Pakistan should be available to Pakistan Customs. This data should be tallied with import entries filed at all ports of entry in Pakistan.

Within a couple of months, the FBR will be able to reduce the huge loss (running into billions of rupees) suffered by the state owing to smuggling, under-invoicing and misdeclaration.

Unfortunately, the huge official support enjoyed by our smugglers and unscrupulous traders is preventing the government from taking any action against them. But then, if the country is to survive, there is no other way than to tax all such people as well.
Copyright Business Recorder, 2010