When Imran Khan took oath as prime minister, all hopes of a turnaround swirled around his personality because he incessantly promised ‘change’ in his election campaign.
The community of economists in Pakistan also had high hopes from his government; that perhaps finally the much needed change in the way that the economy has been managed was finally here. Sadly, Imran Khan and his coterie of turncoats have been nothing but a disappointment. It only took 10 months for Asad Umar, PTI’s economic wizard, to be exposed and be sent home. Any lingering doubts regarding the incompetence of the PTI’s economic team died when Imran Khan appeared on television screens a few days ago, selling the same old narrative that Pakistanis do not pay taxes.
With all due respect, the prime minister is wrong. Perhaps he is being duped by those who have been duping the ones before him, those who keep asking rulers to read the same script to cover up governance, economic and administrative failures. Perhaps it is the big-time donors again who put the prime minister up to this.
The truth of the matter is that Pakistanis do pay taxes. In fact, in many cases, they pay excessively.
First, try naming a commodity or a good in Pakistan that is not taxed. I can bet you cannot think of any. In fact, we would love to see a list of tax-free goods in Pakistan.
At the end of the last fiscal year (June 20, 2018), Pakistan’s total tax revenue stood at approximately Rs4.5 trillion and the total government revenue was Rs5.2 trillion. This is a real figure, unlike the illusory $200 billion that was supposed to flow into national treasury once the prime minister assumed office.
One way or the other, Pakistanis paid Rs4.5 trillion in taxes and Rs5.2 trillion combined in taxes and other charges. Would you still maintain that Pakistanis are tax thieves?
The fact of the matter is that most Pakistanis, except for elites, are paying through their noses just to maintain whatever standard of living they have, an existence made more precarious by the tsunami of inflation unleashed recently.
From birth to death, citizens of this country are charged. Even the constitutionally guaranteed right to apply for government jobs carries a monetary penalty. Arranging for a grave costs a fortune in most cities now, another sort of tax that citizens have to pay. These are just the visible taxes that are exacted from people. I won’t bring into discussion the invisible ones, those inflicted due to poor governance.
If Pakistanis are paying taxes, then why does it appear as if they don’t? There are two answers to this question: the very hungry leviathan called government, and utterly incompetent people that surround and advise the current prime minister and the ones before him.
The amount of tax revenue has increased from Rs405 billion in 1999-00 to Rs4.4 trillion in fiscal 2017-18, constituting a 1000 percent increase. That is no mean feat. But over the same time period, expenditures of the government have galloped from Rs709 billion to Rs7.4 trillion. Within this period, the difference between total expenditures and tax revenue has widened from a mere Rs300 billion to nearly Rs3,000 billion. In essence, the problem is the hungry leviathan that goes by the name of government, rather than the people who are regularly accused of being tax thieves. The government’s footprint has expanded way beyond its capacity to do anything good.
Let us suppose for the sake of argument that people somehow cough up Rs2 trillion more. What is the guarantee that expenditures will not gallop by a trillion or more?
The second critical aspect is the poor advice on the economy the prime minister gets from the people who surround him. The main advice and numbers come from finance division. That place is infested with bureaucrats, retired and serving, and the show is now run by a courtier cum flatterer, heading the reforms unit within the finance division. Flown straight from Australia a decade ago and placed in Block Q, he has managed to court favour with every government, including the current one, which has gone a step further and anointed him ‘advisor’ to Finance Ministry.
Can we please check what ‘reform’ work has he done over the last decade, and what ‘advice’ is he rendering to Imran Khan’s government? Also, have you ever wondered what are all the retired people doing in government departments, including Block Q? After all, they are being financed by taxpayer’s money.
What the prime minister was mentioning was the fact that less than one percent of Pakistanis file their wealth returns every year, which is different from an income tax. Why do so few Pakistanis file wealth returns? The answer lies in lack of trust between citizens and their government, built and solidified over decades of bad governance. Forget
Everything aside, I would invite you just to analyse the availability of water in the federal capital, especially in summer. What has the government done to alleviate this human misery? Lack of any meaningful action is what causes this trust deficit.
Or you can examine how unscrupulously governments have extracted money from people in the name of withholding taxes. Why should the citizens then trust their government and reveal everything about their wealth and income? What is the guarantee that the government won’t fleece us through a discretionary measure (like an SRO), as has been the norm?
I will come to the conclusion of my arguments by imploring the prime minister to not repeat the same mistakes as the rulers before him. Yes, many Pakistanis are not paying their due share of taxes, especially the elite. But that is not unique to Pakistan; it is a global trend.
The writer is an economist
The community of economists in Pakistan also had high hopes from his government; that perhaps finally the much needed change in the way that the economy has been managed was finally here. Sadly, Imran Khan and his coterie of turncoats have been nothing but a disappointment. It only took 10 months for Asad Umar, PTI’s economic wizard, to be exposed and be sent home. Any lingering doubts regarding the incompetence of the PTI’s economic team died when Imran Khan appeared on television screens a few days ago, selling the same old narrative that Pakistanis do not pay taxes.
With all due respect, the prime minister is wrong. Perhaps he is being duped by those who have been duping the ones before him, those who keep asking rulers to read the same script to cover up governance, economic and administrative failures. Perhaps it is the big-time donors again who put the prime minister up to this.
The truth of the matter is that Pakistanis do pay taxes. In fact, in many cases, they pay excessively.
First, try naming a commodity or a good in Pakistan that is not taxed. I can bet you cannot think of any. In fact, we would love to see a list of tax-free goods in Pakistan.
At the end of the last fiscal year (June 20, 2018), Pakistan’s total tax revenue stood at approximately Rs4.5 trillion and the total government revenue was Rs5.2 trillion. This is a real figure, unlike the illusory $200 billion that was supposed to flow into national treasury once the prime minister assumed office.
One way or the other, Pakistanis paid Rs4.5 trillion in taxes and Rs5.2 trillion combined in taxes and other charges. Would you still maintain that Pakistanis are tax thieves?
The fact of the matter is that most Pakistanis, except for elites, are paying through their noses just to maintain whatever standard of living they have, an existence made more precarious by the tsunami of inflation unleashed recently.
From birth to death, citizens of this country are charged. Even the constitutionally guaranteed right to apply for government jobs carries a monetary penalty. Arranging for a grave costs a fortune in most cities now, another sort of tax that citizens have to pay. These are just the visible taxes that are exacted from people. I won’t bring into discussion the invisible ones, those inflicted due to poor governance.
If Pakistanis are paying taxes, then why does it appear as if they don’t? There are two answers to this question: the very hungry leviathan called government, and utterly incompetent people that surround and advise the current prime minister and the ones before him.
The amount of tax revenue has increased from Rs405 billion in 1999-00 to Rs4.4 trillion in fiscal 2017-18, constituting a 1000 percent increase. That is no mean feat. But over the same time period, expenditures of the government have galloped from Rs709 billion to Rs7.4 trillion. Within this period, the difference between total expenditures and tax revenue has widened from a mere Rs300 billion to nearly Rs3,000 billion. In essence, the problem is the hungry leviathan that goes by the name of government, rather than the people who are regularly accused of being tax thieves. The government’s footprint has expanded way beyond its capacity to do anything good.
Let us suppose for the sake of argument that people somehow cough up Rs2 trillion more. What is the guarantee that expenditures will not gallop by a trillion or more?
The second critical aspect is the poor advice on the economy the prime minister gets from the people who surround him. The main advice and numbers come from finance division. That place is infested with bureaucrats, retired and serving, and the show is now run by a courtier cum flatterer, heading the reforms unit within the finance division. Flown straight from Australia a decade ago and placed in Block Q, he has managed to court favour with every government, including the current one, which has gone a step further and anointed him ‘advisor’ to Finance Ministry.
Can we please check what ‘reform’ work has he done over the last decade, and what ‘advice’ is he rendering to Imran Khan’s government? Also, have you ever wondered what are all the retired people doing in government departments, including Block Q? After all, they are being financed by taxpayer’s money.
What the prime minister was mentioning was the fact that less than one percent of Pakistanis file their wealth returns every year, which is different from an income tax. Why do so few Pakistanis file wealth returns? The answer lies in lack of trust between citizens and their government, built and solidified over decades of bad governance. Forget
Everything aside, I would invite you just to analyse the availability of water in the federal capital, especially in summer. What has the government done to alleviate this human misery? Lack of any meaningful action is what causes this trust deficit.
Or you can examine how unscrupulously governments have extracted money from people in the name of withholding taxes. Why should the citizens then trust their government and reveal everything about their wealth and income? What is the guarantee that the government won’t fleece us through a discretionary measure (like an SRO), as has been the norm?
I will come to the conclusion of my arguments by imploring the prime minister to not repeat the same mistakes as the rulers before him. Yes, many Pakistanis are not paying their due share of taxes, especially the elite. But that is not unique to Pakistan; it is a global trend.
The writer is an economist