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August 29, 2015



Will pay bhatta - not tax

Bank deposits of private businesses in Pakistan declined 5.25 percent in July. Rs131.8 billion left the banking system in the first fiscal month of 2015-16, according to data released on August 19 by the State Bank of Pakistan. The sudden fall shows how deeply disturbed businesses in Pakistan are over the imposition of a withholding tax on banking transactions worth more than Rs50,000 in a day by non-filers (of tax returns).
Rs150 is what traders have demonstrated resolute unity in refusing to pay. We wonder why those businessmen, many of whom have been obediently and regularly paying bhatta (extortion money) worth thousands to millions a month per business, find 0.3 percent tax unbearable to pay.
The key reason referred to is that if the traders remain outside the tax net, they will have to pay 0.3 percent on every banking sector transaction. And if they file returns to avoid the levy, they will have to declare their assets and actual sales, which may push them in higher income tax slabs and their sales will also be subject to the standard 17 percent sales tax.
However, there are more reasons for our collective opposition to tax. These can be abundantly found in the various differences between the two money-collecting processes. The most fundamental is the difference in the degree of seriousness between bhatta khors (extortionists) and the government. Traders know extortionists are a serious and determined money-collecting body; they mean business and resort to ‘decisive’ action in case of noncompliance. The state, on the other hand, can forever dither and loiter when it comes to taking action.
It took this state more than a decade and around 60,000 lost lives to act against terrorism. It also took the country’s thousands of billions of rupees to be brazenly looted and hundreds of thousands of acres of land squatted for the state to take some semblance of action against the lower cadres of corruption and crime in this country. Yet the greater

political class of the state remains opposed to action against corruption.
Furthermore, everybody in this country knows the state can be cowered into submission. All that’s needed is a ‘protesting’ group of people on the road.
Then there is a stark difference in the way the government treats its own people and the way extortionists do. Corruption is embezzlement of state money. However, the state is forever lenient towards corruption and the corrupt. On the other hand, extortionists have no mercy for those in their ranks who try to steal the organisation’s money.
The collection system of the two bodies has remarkable differences. When businessmen pay bhatta they know the money will be honestly disbursed and reach where it’s supposed to reach in a bhatta network.
That is not the case in the payment of taxes. Nobody is sure whether their paid taxes will reach where they are supposed to – to the benefit of the state and its people. There is extensive corruption in the FBR, as been kindly acknowledged by our august parliamentarians too on occasions like December 2, 2010 when during the proceedings of the National Assembly’s Standing Committee on Finance and Revenue members belonging to the PML-N, PML-Q, ANP and MQM acknowledged and called for an end to the Rs500-600 billion worth of annual corruption in the FBR.
What further discourages and disappoints the business community is the level of ownership of the state’s interests by the ruling class of the state. The ruling class has its fundamental life and death interests everywhere but in this state. They have business and family engagements spread richly from Dubai, Jeddah, London, New York, Malaysia to Germany – and even in India now. It’s thus unfair to expect or demand them to stand for this state’s interests when their greater personal and family interests lie elsewhere. In contrast extortionists give supreme value to the interests of their gangs and rackets that enable them to make money.
On the other hand, due to the global family and business interests of Pakistan’s corrupt ruling class people from more countries now enjoy the sacred status in Pakistan that was once exclusive to gora sahibs and later extended to Arab sheikhs since the 1970s. Now it is not just Raymond Davis who can kill Pakistanis in Pakistan in broad daylight and get away on the state of Pakistan’s expense but Indian singer Sukhbir Singh can also merrily ‘escape’ after being reportedly caught with $29,000 at the Lahore airport.
Bhatta money is spent where it is supposed to be spent – for the benefit of its receivers and their patrons. On the other hand, the business community and common Pakistanis always have doubts whether their paid taxes will be spent for the state’s benefit or not. Karachi, the biggest tax-paying city, is an ideal example of this situation. The city has been relentlessly plundered by feudal democracy like it’s the enemy’s territory rather than being part of the province – as everyone cries it is when it comes to taking advantage of the city’s resources.
No city of around 20 million in the civilised world is without a powerful city government and proper mass transit system of mono trains. Karachi has none of that. It has been run by deputy commissioners and Qinqgi rickshaws. Unending changes have been introduced in district government powers to ensure feudal control over the city and its resources. The city is in ruins; money all freely looted and encroached upon. Will the conditions of Karachi encourage anyone to pay their taxes?
As long as governments continue working for the interests of the corrupt ruling class instead of this state the people of this country will continue to pay bhatta, not tax.
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