KARACHI: Pakistanis’ attitude towards paying taxes is the main reason why the country’s tax base remains low, special assistant to the prime minister on revenue has said, vindicating the Federal Board of Revenue (FBR) completely.

“The amount of tax evasion (in our country) is mind-boggling. FBR notices and audits are considered as harassment,” Haroon Akhtar Khan said while speaking at a business forum on Saturday.

The forum, Pakistan Business and Economic Summit, was organised by Nutshell Forum and Corporate Pakistan Group in association with the Overseas Investors Chamber of Commerce and Industry (OICCI) and Pakistan Business Council (PBC).

He alleged that people have grossly misused the income tax system based on self-assessment, and that was precisely the reason why the government has resorted to withholding tax, advance tax and the like.

Highlighting steps like introduction of a bill prohibiting benami transactions and Pakistan officially becoming a signatory of an Organisation for Economic Cooperation and Development’s convention aimed at curbing growing tax evasion, he said that soon there would be no place for people to hide their dirty money. “If they don’t declare their assets, the FBR will,” he warned.

However, his fierce assertions were met by even fiercer responses by some participants who believed that the government was itself responsible for this mess and that the country’s tax system was complex and favoured the rich.

“You need a PhD degree to understand the current tax system,” quipped Abrar Hasan, CEO of National Foods Ltd. He pointed out that complicated tax system was leading to increased cost of doing business, which has left businesses uncompetitive.

He also griped about money-whitening tax amnesty schemes and described them as “a slap on the face of honest taxpayers”. By doing that, “the government is actually saying (to taxpaying people) that ‘you could’ve done that, too.’”

Syed Asad Ali Shah, managing partner at Deloitte Pakistan, said the government needs to reduce tax rates, limit double taxation and win people’s trust. “The government collects excess taxes and doesn’t refund the money to taxpayers. How can you improve tax compliance in such a situation?”

Senior partner at AF Ferguson Shabbar Zaidi believed it’s about time the government documented the economy as most assets remained out of its reach.

Privatisation Minister Mohammad Zubair told participants that Pakistan’s economy was facing an uncertain situation when the current government took over. “We have worked day and night to revive the economy... The Pakistan Stock Exchange is now the best stock exchange of the region.”

Musadik Malik, spokesman for prime minister, said the China-Pakistan Economic Corridor is a revolutionary project under which new power plants will be set up and new employment opportunities will be created.

“Things are going in the right direction as a whole,” financier Arif Habib told Dawn at the sidelines of the conference, attended by around 250 delegates, including CEOs, ministers, diplomats, energy experts, investors and members of civil society. However, he stressed the government will need to work hard, and identified a sharp rise in current account deficit and fall in remittances as two of the issues that the government needed to address.

The country’s floundering exports also came under discussion. During his address, PBC CEO Ehsan A. Malik said exports were going down not just because of a global recession, but our energy and labour costs were also higher than most regional countries.

On foreign direct investment, he said inflows from abroad were necessary but “how can we convince foreigners when we don’t even report domestic investment?”

“Pakistani leaders are treated with suspicion and there’s red carpet for foreigners,” he lamented.

Published in Dawn October 23rd, 2016

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