Income tax and corruption

In the post World War II period, the income tax rate in the United States was up to 90 percent of personal incomes. High taxation normally depresses a country’s economy but in that period the United States was the sole controller of world capital and the country’s treasury needed funds for supporting rehabilitation of the other war-devastated countries to spread its political influence all over the world. Today, the conditions are quite different and the United States has many competitors in its pursuit of capital and any increase in its present low rates of income tax may precipitate a collapse of its economy.

That is the state of a developed country. In an underdeveloped country like ours where the public treasury is a prime target for loot and plunder, high taxation is and has been a good recipe for perpetuating poverty. Already, it is difficult to start a new business or industry here because such efforts are pounced upon by the tax officials who seem ever ready to nip any kind of entrepreneurship in the bud. And in our country we have all kinds of scholars in science, philosophy, or religion.

But what we totally lack is the long-haul entrepreneur, the kind who starts an industry or a business and spends his entire lifetime in developing it, as against the instant-gratification seeker businessman such as a shopkeeper or a bus owner who would like to see his day’s earnings right in his own pocket by the end of the day. This latter kind we have in plenty. The direct income tax suppresses the former type of entrepreneurship without which no country can ever hope to achieve a developed status.

It is alarming to note that the Western powers are all the time urging us to enhance income tax whereas this type of tax acts as a good source of damping personal enterprise. Moreover, ours is a mostly undocumented economy due to rampant illiteracy and such a tax only increases the discretionary powers of the bureaucracy multiplying chances of corruption. Thus, any large scale increase in direct taxation is bound to bring down agricultural production resulting in famines and will further depress the industrial activity, increasing our dependence on foreign aid.

After acquiring nuclear status, we are a prime target for all kinds of blackmail to keep us subservient to the superpowers. Everything in our country is already being taxed to the hilt. We have one of the highest taxation rates in the world. And yet we cannot balance our budget. The real cause of this is the widespread corruption in our bureaucracy and our leadership and our belligerent policies towards our surrounding neighourhood.

What we really need is that instead of perpetuating the status quo in all spheres of our national life, we need to radically change it. We need some honest and patriotic leadership and soon without which we cannot go on for very long.

MUHAMMAD AKRAM

Muzaffargarh