ISLAMABAD: In April 1983, tax authorities appointed an assistant commissioner in Rawalpindi. This was his first posting after clearing the competitive exam. The jurisdiction allotted included Pakistan Army’s General Headquarters (GHQ). This was then not only the nerve center of the security establishment but also the epicenter of political power.
Chief of Army Staff General Ziaul Haq was the President of Pakistan. Other than breaking the Constitution to grab power, the COAS-President had violated the tax laws. No income tax return was filed for the last 10 years.
Putting him on notice needed guts. This was the first challenge at maiden posting being faced by Haroon Muhammad Khan Tareen, the income tax officer dealing with GHQ. He picked up the courage and did what the law demanded. The notice was sent which was the first and the last received by Gen Zia.
A few days later, the staff of COAS-President, rang Tareen. The conversation began with conveying Zia’s compliments for this tax officer. A demand followed: President was pleased to ask if the officer could come to his office for furnishing his tax return forms. Tareen replied that it was not his duty hence refused.
His commissioner went in panic after getting wind of the matter and tried to convince in vain to the young officer living in utopia. There was no option left for the weak boss but to post him out. Chakwal was Tareen’s next station where average annual tax collection by that time wouldn’t exceed Rs4 million, a target he achieved in the first six months.
Meanwhile, Zia came on a visit of Chakwal. His reception turned into a festive occasion. This arose curiosity in Tareen to inquire about the spending incurred on the presidential reception. Much to his shock, a district administration officer involved in the process told him that this one visit cost as much as the tax was collected from the entire district (Rs4 million).
Tareen’s war against the tax evaders didn’t go well with the high-ups. Incidentally, the boss who had posted him out from Rawalpindi was from Chakwal and it was also under his jurisdiction. He was eventually transferred. Sensing his rebellious nature, the bosses thought it better to assign the jobs restraining him from taking action against the tax evaders. He spent many years of service while working as staff officer or in the FBR headquarters instead of getting field posting.
In these side-line postings, he would avidly watch how the rich and powerful escape the tax net with full impunity. He was the staff officer to regional commissioner of Islamabad in 1985 when the issue of tax evasion of a chief minister cropped up.
That CM was the director of a sugar mill and had purchased machinery from a Japanese company. The seller was paid Rs10 million for the equipments which were actually purchased in Rs8 million. Intended objective was to pocket Rs2 million by hoodwinking other directors of the mill.
That amount was transferred in the chief minister’s account by the company. During the course of tax audit in Japan, it was explained accordingly. Subsequently, the Japanese tax authorities wrote to Pakistani counterparts inquiring whether the purchaser had reflected that Rs2 million in his tax returns. Living up to its reputations, Federal Board of Revenue bailed the CM out instead of proceeding against him.
Another such incident of the FBR’s connivance with the rich in the past was still afresh in Tareen’s memory. This happened in 2008-09. It was about the scion of a business tycoon who had purchased the property of $23 million in New York. American tax authorities wrote to the FBR asking whether the money was declared and taxed in Pakistan or not.
Tareen witnessed this episode as a staff officer of the FBR’s chairman. A tax amnesty scheme was in progress by that time. The FBR rescued the businessman by helping him launder the money in Pakistan which had already been invested in the US. The FBR subsequently wrote to American counterpart, giving the clean chit to this influential investor.
Curious as to how the funds were transferred abroad, Tareen asked this question to the businessman. It was transpired that the father would load the cash into son’s accounts in American Express Bank in Pakistan who would subsequently make payments in New York through the credit card. State Bank of Pakistan remained in the dark about the capital flight. Needless to say, this is the story of one businessman and we came to know only through American authorities.
In the twilight of his career, Tareen assumed a post where he could directly take on the big fish. He was appointed as DG Intelligence and Investigation (I&I), Inland Revenue. He filed reference against the tax evaders and pursued them to the court. His daring steps would have been tolerable with the authorities had he not touched the tycoons closely connected with the high-ups.
Tareen was warned in the beginning. One of his bosses told him that such defiance could deprive him of his promotion to BS-22. However, he didn’t change his stance and paid the price: retired from service in BS-21.
On the last day of his service, he wrote a letter to the FBR chairman. He demanded taxing the rich instead of shifting the burden on the poor through indirect taxes and advised his juniors that never bow before the political pressure regardless of the consequences.
His letter is a summary of how our skewed tax system works. He wrote that tax collection through indirect taxes had distorted the basic concept of taxation. “FBR’s dependence on withholding tax has become so great that almost two thirds of our income tax collection now arises from withholding tax under various heads. In fact, we collect withholding tax from forty three different types of transactions which cover almost all aspects of the daily life of an ordinary citizen,” his letter reads.
In the developed countries, direct taxes are a means to reduce poverty by regulating the tax rates on higher income groups for the advantage of the poor whereas in Pakistan, his letter notes, the tendency has been reversed over the year. “While the rich earn the most, the poor are being made to pay the most (through indirect taxes),” it reads.
He demanded abolishing the concept of withholding taxes as final liability in addition to calling for diverting most of the resources towards strengthening the audit system. “From my experience of working as Member Audit, I can say with certainty that the capacity of our officers to conduct audit has eroded drastically and this reflects through very poor audit which yields no additional revenue,” the letter reads.
In his concluding paragraph, he pointed out rampant political interference that needed to be curbed. In the culture of “sifarish” the tax evaders feel safe under the shadow of powerful political figures. “Unfortunately, I have suffered due to political victimisation but I am glad not to have succumbed to those pressures during my service and I leave my career with a clean conscience. Though it appears unlikely to happen but I wish the officers of the departments to have the moral courage to refuse to illegal orders, requests and demands made by political figures. I did set an example,” he wrote.
