Following the Federal government’s strict action against the tax-evaders and broadening up of tax net, the Faisalabad Excise Department has launched a crack down on tax defaulters. In this context, more than 500 individuals have been identified as tax defaulters and their arrest warrants have been issued. In an earlier move, the Excise inspection teams had nominated around 1500 private properties that were not paying any property tax since many years. There are reports that 80 percent of these cases have been settled and the authorities have taken a further course of action against the remaining defaulting parties. During the ongoing campaign, more than 150 individuals were arrested who entered into a compromise and paid their dues to win their release. Majority of these defaulters belong to the commercial category.
It is reported that the authorities have decided to confiscate and auction the properties for which the officials are undertaking these legal formalities. Department sources say that the local authorities came into action following directions from higher authorities that censured Director Excise Faisalabad Munawar Ahmed Kharal for his incompetency to achieve the yearly target before the close of the fiscal year.
However, those accused of default have an altogether different story to tell. A commercial property owner, who calls himself a victim of tax authorities, says that the crackdown was launched to force the owner to enter into sleazy deals with the excise inspectors. “I am not a defaulter; they enlisted me because I objected to their arbitrary assessment procedure”, he said. I am ready to pay a fair amount of money due on my property but how can I pay Rs50, 000 instead of Rs6, 000 that I was paying before. Quoting a well-known industrialist of Pakistan he said, “In a society, deep neck in corruption, I more often than not, find myself a misfit; there is no place for a veteran businessman in Pakistani society”.
Another defaulter listed by the local Excise authorities said, “There is no business in Pakistan that can be run without paying bribes to the tax authorities; that’s why we are being victimized by tax authorities that are running a parallel government within a government ”. There are consistent reports of rampant corruption in tax collection and according to a World Bank report tax evasion in Pakistan amounted to Rs800 billion in the period 2007-08.
The general perception is that the tax rate in Pakistan is too high . On the one hand, it is not providing the least of the basic services to its subjects such as law and order, protection of life, liberty and property let alone free education or health facilities to its citizens. On the other, under the slogan of a Welfare state, it is resorting to high taxes and control over the lives of the people, and thus it has to sustain an ever-increasing state-machinery.
Under the circumstances, as the Pakistani government has not been able to form and practice a just, uniform and consistent policy of taxation, the process of taxation in Pakistan is in shambles. Indeed, it has become a tool in the hands of the privileged and powerful elites and groups. They pressurize, bribe or influence the authorities to impose a new tax or increase the rate of an old one to reap the benefits or to harm their rivals. Taxes are imposed; waived and re-imposed however it may suit them.
The policy and practice of the FBR is so complex, cumbersome and consists of such a mechanism that it is beyond the comprehension of an ordinary businessman. It grants dictatorial discretionary powers to the tax collectors. With this background in mind, one can easily understand why people resort to tax-evasion.
