June 17, 2008	Tuesday	Jamadi-us-Sani 12, 1429

KARACHI, June 16: Holding laxity in the enforcement of laws in the country responsible for tax evasion, speakers at a seminar said that keeping in view the progress made by tax evaders in every walk of life, honest taxpayers have been tempted to follow suit.

The seminar on “Malpractices in the private sector and control measures” organised by the National Accountability Bureau (NAB), Sindh, was held on Monday.

The chief guest, Barrister Shahida Jamil, a former federal minister, was of the view that instead of taking any action against the private sector, the relevant authorities should take the stakeholders into confidence while making policies so that they could play their due role in the progress of the country.

She said that it was ironic that the government through the National Reconciliation Ordinance (NRO) had given amnesty to those who had misappropriated the public’s income while the NAB had been set up to deal with those who were generating funds to further the economy. Stressing the need for an immediate reformation of the NAB laws, she said that even the topic of the seminar reflected the old mindset of a sort of witch-hunt against the private sector. The former minister also called for an external audit.

She said that in the public sector employment was provided on the basis of political considerations; besides it had been plagued by the bureaucratic approach that had been employed to operate this sector and that had rendered it commercially unproductive. The private sector, on the other hand, provided jobs and generated revenue for the economy and it took decisions that it deemed commercially viable, so it made profits, she added.

Arif Habib of the Karachi Stock Exchange said that some unscrupulous elements did indulge in under-invoicing and over-invoicing in import and export business to benefit from lower import duties and to get rebate while exporting, similarly some businesses in the corporate sector also siphoned off the real profits and the minority shareholders suffered. Insider trading and manipulating trading also sometimes affected the capital markets.

Stressing the need for the use of modern technology, he said that trade in the KSE in the 1990s was done verbally but now it had been computerised and had become quite transparent and much quicker.

He suggested that awareness be raised, monitoring and regulating process be updated and that the penalties, which had been fixed years and in some cases even decades ago, be updated.

The chief of the NAB, Sindh, retired Lt-Col Khursheed Alam, accused the private sector of exploiting the loopholes in the system and of bypassing weak institutional arrangements. He said that the private sector took undue advantage of innocent investors, while the corporate sector, to a large extent, had been responsible for the erosion of the confidence of the masses and powerful brokerage houses continued to influence share and commodity prices.

He said that the regulatory regimes must be strengthened to play an effective role in curbing the menace in the corporate sector without actually impeding the growth of the private sector through overregulation.

Nisar Shekhani of the Site Association said that a lack of accountability, loopholes in the laws, low salaries of the regulating staff, discretionary powers of regulators and a poor implementation of laws were some of the reasons owing to which the country remained on top of the list, prepared by the Transparency International, of those countries where corruption was rampant.

He said that honest businessmen found it difficult to compete with the crooks who paid less or no taxes at all. He said that even ISO certification, which was needed for certain exports, could be arranged without even following the laid down standards.

He said that standards and laws be followed properly so that the country could compete and survive in the global economy.

Asrar Rauf of the Federal Board of Revenue said that despite a lapse of over 60 years majority of the people felt that tax was a colonial legacy and did not feel that paying it was their civic responsibility.

He said that the regulators were not updated with the prevailing conditions and penalties, which could deter the tax evaders. He said that some reforms had been introduced in the tax collection system due to which the collections had increased from Rs460 billion in 2003 and this year it was expected to be around Rs1 trillion. The number of taxpayers had also increased from one million to over 2.2 million.

Speaking on consumers rights, Huma Bukhari said that a lack of accountability of the culprits was the main cause of malpractices and corruption. Citing an example, she said profit was made by first exporting wheat and later again the same commodity was imported at a much higher price. Similarly, cartels were operating in almost all the fields be it sugar, cement, rice, even water supply was controlled by the tankers mafia, she said, adding that it was the height of corruption that bridges fell within weeks of inauguration but nobody was taken to task.