‘Amnesty for tax evaders must go to increase revenue collection’

LAHORE: Experts say that tax evaders in Pakistan get tax amnesty because they avoid paying any tax at all, while taxpayers are slapped with tax penalty if they delay the filing of their income tax or sales tax returns.
They blame the frequent amnesty schemes for the lack of tax culture in Pakistan as it proved that evasion was better than compliance. In case of tax compliance you have to pay taxes at the government notified rates, but in case of tax evasion you whiten your wealth by paying a fraction of the actual tax.
According to media reports, the government is contemplating to announce another amnesty scheme for tax evaders, as if the amnesty granted under foreign remittances was not enough, said economist Asf Ali Shahid. The accumulation of huge amounts of black money in Pakistan, despite the opportunity to launder money via foreign remittances testifies there is no fear of the Federal Board of Revenue.
He said even taxpayers conceal income from the FBR, as they know that more than 50 percent of the businessmen are doing so.
“These under-filers are shirking their moral duty towards the state.
Taxes are used for public good and any citizen who is not paying his due share is damaging this important purpose,” Shahid said.
There is dire need to organise support for morally important public goods, such as public safety, and to do it in a fair way. “Of course, some people aren’t paying their assigned share, and that’s unfair.
Morality takes a back seat when those that do not pay any taxes at all are rewarded by the state through amnesty schemes,” he added.
Shahid lamented the new additional taxes that make the life of the common man miserable.
He said on one hand, a large section of businesses do not pay any taxes, while on the other, the number of under filers is also on the rise.
He said such a situation would increase the amount that the under filers save by showing lower production and lower profits.
Economist Faisal Qamar said that our legislatures sometimes do not approve laws because they think its enforcement would be an uphill task.
He said the right thing for a legislature to do is to enact a new law, and ensure its compliance through parliamentary oversight.
He said citizens must realize that their ability to break laws is immoral and should be avoided. He said following the moral path is not an easy option, particularly when a company could not only get away from compliance but also benefits financially. He said firms do not pay legitimate overtime to their workers because the regulators are lax in implementation.
This, he added, is the reason we find two types of employers in the country.
The first deny the right of workers to overtime since the penalties for non compliance are mild. For informal businesses on the other hand, the law is not even enforced because they are not registered entities.
He said registering noncompliant businesses was the responsibility of the state. With enforcement, the state opens the way to ensure labour law compliance and tax compliance.
However, he added frequent amnesty schemes provide a low cost way out to the tax evader who also continues to violate all labour and tax laws by whitening his wealth through subsequent amnesty schemes.