In a civilized society, the government is always grateful to those citizens who not only pay their own taxes but also act as withholding agent on State’s behalf and collect taxes for the well-being of their fellow countrymen.
The State not only recognises their services but also authorises them to hold back a certain percentage of collection as their charges to compensate expenses incurred by them in the performance of the official function. In Pakistan the converse is happening. These withholding agents are the most insulted and the humiliated.
They are considered “servants” of the State, no financial compensation is given to them for man-hours and other expenses they spend to collect taxes on behalf of the CBR and on top of that they are subjected to penal actions.
This shows the real disgusting and ugly face of our tax machinery that collects hardly 10 per cent of total revenues with its own efforts and for the rest uses the citizens as withholding agents. Our tax ‘baboos’ sitting in the CBR, backed by ‘gora sahibs’ in the ministry of finance, the IMF and World Bank, are destroying the entire social fabric of society by depriving the people of their self-esteem and legal rights.
The State is no more interested in restoring the rights of the people and check the highhandedness of the tax officials. The rulers have submitted themselves to the dictates of the IMF and other donors, who have one agenda: to extort as much revenue from our people as possible and make us permanently dependent on them. Our financial enslavement has resulted into an unfettered power for the tax machinery.
The CBR stalwarts and their field formations are twisting everybody’s arm. In order to meet their targets, they are bent on destroying business houses, the state-owned corporations and 100 per cent owned government banks are no exception.
They are being served notices of inflated demands or alleged defaults committed years ago in deducting taxes at source.The greedy traders and unscrupulous industrialists are not suffering as they are hiding their actual incomes and passing on their tax burdens to common people thus unveiling the real hidden agenda prepared by the foreign masters for us.
Mr Justice Nasim Sikander, a judge of Lahore High Court, in a case reported as PTCL 2000 CL. 696, made the following radiant remarks:
“The collection of revenue even as an agent casts a number of duties upon the person required to do so. He is to maintain correct and faithful accounts of all the sums received and then to see
their safe credit to the national coffer.
He may need additional staff for this purpose and may even be liable if any of his staff members fumbles in accounts deliberately or misappropriate even smallest amount of public money collected. An agent appointed by law or deemed under a similar statute is also liable to a number of penalties if he fails or falters on any account.
This phenomenon in fact is a recent development in tax regimes that persons who are
otherwise neither employed
by the State nor they represent it in any manner are designated to collect Revenue of theState without any ostensible reward.
This is a duty cast upon them with no benefit and is coupled with a constant fear of prosecution, penalties and punishments. It is one of the several other prices that one has to pay to live in a society.”
These observations by the learned Judge have not attracted the attention of our revenue-maniac governments as even today they are utilizing the services of the citizens to collect tax on their behalf without any reward.
On the contrary, they have been subjected to the worst one can think of: as they are receiving notices of penalties and prosecutions.
This irritating state of affairs has forced many of them to close down their businesses and to migrate from Pakistan. They were not ready to pay such a heavy price and that too for living in a society that is not civilized by any standard.
Taxes are a price one pays to live in a civilized society, and not in a place where even the basic protection of life and property is non-existent. The State never bothers to protect the life and property of its citizens, rather exploits them ruthlessly.
The mass scale evasion of taxes is not possible without the connivance of tax administrators.
It is an established fact that despite resorting to all kinds of highhandedness, data manipulation, harsh tax policies and unjust withholding taxes, the CBR has failed miserably to improve the tax-GDP ratio. It remains hovered in the range of 10 to 12 per cent of the GDP for the last ten years.
The burden of ever-increasing presumptive taxes (which are nothing but a form of indirect taxes), shamelessly levied under the Income Tax regime, has been shifted from income earners to consumers and clients.
These presumptive taxes have distorted the whole tax system, destroyed the economic growth and made the consumer/client the ultimate sufferers. Moreover, these despotic, short-term, myopic and figure-oriented measures have even failed to bridge the fiscal deficit.
The presumptive taxes were imposed in the federal budget of 1991, when the fiscal deficit was just Rs. 80 billion. In FY 2000-2001, our fiscal deficit soared to over Rs. 200 billion, proving beyond any doubt that irrational taxes did not solve our fiscal management, rather forced us to move on the verge of total economic collapse.
Irrational tax measures have always played a decisive role in destroying civic society and paving way for anarchy and chaos. This is exactly what the tax administrators have been perpetually doing.
How can the federal government force the people living in various provinces to act as tax withholding agents on its behalf? This is encroachment on their right under the provincial autonomy. The federal government has authority under the constitution to levy tax on income other than agricultural income, but does it have the authority to make people of provinces act as withholding agents?
The federal government can only collect these taxes through federal civil servants and not by using the persons as their agents.
The federal government has already violated its constitutional mandate by levying tax on import of goods under the income tax as presumptive tax which is otherwise the sole prerogative of the provinces.
It has wrongly assumed the right of levying sales tax on federal level whereas in all the countries of the world having Federal system of government this right vests with the federating units and not the centre. India is a ready example in hand.
The people of Pakistan are the victims of international “financial terrorism”, as day by day the IMF and other donors are imposing more and more harsh conditions. The commercial importers (the mighty traders who do not want to pay their taxes) and powerful contractors (who get contracts by bribing officials) are passing on their tax burden to others, courtesy presumptive taxation in Income Tax law which increased the State revenue from Rs. 40 to 102 billion within five years under the so-called direct tax regime, whereas in reality it was a collection in terms of indirect tax.
The levy of taxes on goods and services is the constitutional right of provinces. The federal government violated this constitutional command by levying such taxes under the garb of Income Tax. This is the worst example of “federal highhandedness” where the victims are the poor people of the less privileged provinces.
The constitutional responsibility of distributive justice and social equality was altered, to show just higher collection of tax targets to the IMF and other donors to get more loans.
The most disturbing aspect of the entire episode is that the CBR is now mainly relying on withholding taxes and its performance in terms of its own efforts is decreasing every day. In the financial year 1999-2000, the total collection in income tax through withholding agents was Rs75 billion, whereas total revenue collected was Rs105 billion.
The break up is: tax on demand collected by officers 11.6%, tax paid voluntarily by taxpayers without any effort of the CBR 28.1 per cent and collection made through withholding agents 60.3 per cent ( CBR Year Books 1998-1999 & 1999-2000, Page 30]. These figures speak for themselves and hardly need any comments.
The tax administration is using all kinds of negative tactics to collect revenue targets fixed irrationally without taxing the people according to their capacity. The ruling classes are not paying the taxes due from them and the poor are subjected to 15 to 18 per cent GST even on drugs.
The time is not very far when the people are forced to resort to a tax revolt. The tax administration is posing a threat to society similar to one by religious extremists and the so-called ‘jihadi’ groups.
In a civilized society, the government is always grateful to those citizens who not only pay their own taxes but also act as withholding agent on State’s behalf and collect taxes for the well-being of their fellow countrymen.
