Dealing with tax evasion


It’s not really the light at the end of the tunnel; it is only a promise of the golden future time. Finance Minister Shaukat Tarin suggested that those who do not pay taxes should be deprived of the right to vote and the right to represent the people in legislatures, that is, tax evaders should be eliminated from the decisional process. The minister did not specify how to implement the plan – whether existing laws against tax evaders are sufficient or whether new laws should be introduced to deal with them. He gave only known figures relating to tax evasion, such as the tax-to-GDP ratio in Pakistan which is only 9% and needs to be increased to 20%.

The minister said the government has collected necessary information such as bank account details and the number of cars and houses owned by those who avoid taxes. This information will certainly make it possible to detect tax thieves, thus paving the way for their dispossession of the right to franchise. But to what extent denying them the right to vote will help improve the tax base is unclear. The government must design a comprehensive plan to increase the number of taxpayers in the country. A sufficient amount of tax collection will help finance development and social protection plans in addition to generating employment opportunities. Increased government revenues will lead to lower food prices and lower utility bills. The minister assured companies of the government’s full cooperation if they pay taxes.

The government has made progress in improving tax collection as it collected Rs 50.6 billion in income tax in 2020, compared to Rs 33.1 billion in the year former. However, most people have no information on the amount of revenue the government has collected from the increasing rates of petroleum products. Taxpayers have the right to know how their taxes are being spent. Defenders of soaring inflation blame it on rising international commodity and oil prices. There is no point in arguing with these people.

Posted in The Express Tribune, November 12e, 2021.

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