Fight against tax evasion


LAHORE: The realization that government is sitting on huge data that reveals high income groups tax-free is not new. It only took nerves of steel to apprehend them. Does this diet have the muscle to do it?

The finance minister warned tax evaders to come forward and pay their taxes owed or the state would take taxes away from them. He said the government aims to raise the tax-to-GDP ratio to 11.5%.

This could be achieved by acting on only 20 percent of the available data and sparing the remaining 80 percent.

The data mine is huge and if the right action is taken, the tax-to-GDP ratio could reach 20%.

Every monetary transaction (of note) of a computerized national identity card holder is recorded in the database of the National Automation Data Regulatory Authority (NADRA). If a person purchases a vehicle, the NADRA system registers it under their CNIC. Likewise, the purchase / sale of real estate, agricultural land is documented.

The recording of all trips abroad is recorded in each CNIC. Hotel stays and paid bills are available in NADRA’s CNIC data. Club membership and the amount spent in one year can be retrieved from the NADRA database. Even tuition or education fees above a threshold are available in this data.

The recording of these data began in 2000 under the regime of General Prevez Musharraf. Even the dictator could not benefit from this data because many of the escapees were very influential members of society. Sporadic action has been taken against low-end fraudsters like small traders or political opponents.

Every government that took power after that threatened to bring fraudsters into the tax net with this data.

In fact, the manual tax survey conducted during the Musharraf era found that many families living in the posh and most expensive localities of all the major cities paid no taxes despite a lavish lifestyle and a fleet of expensive cars. . Even then, they were not apprehended by any government.

This regime was also aware of the data gold mine but never acted. There was no need to issue warnings to tax evaders. Tax evasion is illegal and the culprits must be identified without warning.

You do not ask a thief to return stolen goods or face legal action against them. If you know the culprit, you need to act quickly.

This government has announced a few amnesty plans over the past three years to lure tax evaders into the tax net, but the response has been lukewarm. It was announced at the start of all amnesty programs that the government is in possession of data and would take strict action if black money holders did not launder their wealth through an amnesty program by paying a nominal tax.

No action was taken after the expiration of the amnesty programs. Apprehending tax thieves is not a big job, especially when authenticated NADRA data is available. It only requires strong political will. It required fair and transparent operation.

Tax evaders can be found on both sides of the political divide. Just as the charity begins at home, so the responsibility should begin at home.

The government should catch tax evaders in its ranks first to show others that it is serious.

It would be folly to start with a political opponent when the same type of escape is in its own ranks. This would be termed political victimization. The operation must be non-political and fair. When people on the government side are apprehended, it gives the impression of impartial accountability.

The RBF had previously issued thousands of notices to tax evaders based on the data in its possession, but it has failed to increase tax compliance.

News of the advisories was broadcast to the media, but the media were not aware of the outcome of the advisories.

It appears that either the notices were issued in error or the alleged tax evaders “settled” the matter with the RBF.

Let us hope that the Minister of Finance is serious and sincere this time and that the available data is not compromised. We need to see action taken against everyone in a fair and transparent manner with no exceptions.

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