Safeguarding national interest

LAHORE: The new budget has empowered revenue officers to arrest defaulting taxpayers and confiscate smuggled goods. Implementation of these measures would test the state’s resolve in these matters.

Tax evasion the world over is a criminal act and smuggling is considered a heinous crime. Businessmen are frequently jailed if they fail to honour their tax liabilities and smuggled goods are confiscated if the possessor fails to provide the duty paid documents.

In Pakistan, no businessmen have ever been jailed for non-compliance on taxes and smuggling goods are sold openly in all big and small retail outlets as well as in wholesale markets. Laws existed earlier as well to combat these two menaces, but this time specific powers have been granted to tax officials to arrest non-compliant businessmen.

These powers would be vested with officials as soon as the next financial year starts, which is only 15 days away. Still businessmen were confident that they would be able to force the government to withdraw these acts.

There is no panic in the bazaars that are notorious for selling smuggled goods only. The chambers have started registering their protest against the powers to arrest tax defaulters.

They argue that it will hurt the investors’ sentiments. They also argue that these powers would become a tool to extort money from the businessmen.

They rightly point out that the bureaucracy is corrupt, but conveniently ignore the fact that they are partners in this crime. Large scale tax evasion and our pathetic tax to GDP ratio indicate that.

Similarly, markets flooded with smuggled goods are testimony to the fact that the smugglers and businesses have support from inside the bureaucracy and administration. Some markets are notorious for selling smuggled goods only.

The resistance to these measures would be similar to the one exhibited by the traders against the provision of obtaining CNIC of the buyers on purchases of Rs100,000 or above.

The government announced this measure in its first budget and then started delaying it on the pretext of convincing the traders till date.

One can only hope that the government would stand on principles of fairness and let these measures be implemented without any intervention. Similar powers of raids on business premises have been diluted in the past.

The ruling elite stopped the Federal Board of Revenue (FBR) officials from collecting records from the business premises. The inspectors of the environmental agency were forbidden from sealing factories, polluting water channels or emitting thick smoke.

As a result, the non-documented sector flourishes in the country at the expense of tax compliant sectors.

Environmental degradation is increasing with every passing day. The law prohibiting use of plastic shopping bags is being flaunted openly.

Tax to GDP ratio remains pathetically low. All this happens because the regulators are toothless. There may be scores of corrupt officials in the system, but even the most honest are restrained from taking action.

If anyone insists on following the law, they get transferred arbitrarily to some remote areas or are made officers on special duty. The buck to implement reforms rests with the ruling elite. Nothing would progress if they are not fully committed.

This is where the dilemma lies.

Rulers must realise that the violation of rules and regulations is not restricted to those siding with the opposition. Rules are equally flaunted by even those who are siding with the government.

Law should treat both equally as it would be ineffective without fair and transparent implementation.

To implement the law in letter and spirit, the regulators should also be made accountable. It is not fair to arrest businessmen who do not ‘cooperate’ with the regulating officer; while one greasing his palm is spared.

The law is meant to reform and not to punish. Those refusing to pay due taxes should be given some time to pay on the firm commitment that they would not seek refuge through stay orders.

Courts should also act responsibly and refrain from granting relief to tax thieves. After the grace period is over, the tax evaders should be jailed.

The law should be applied evenly. All suspected smuggled goods should be confiscated and released only when proper documents of legal import are furnished. We need to document our economy and get rid of smugglers that marginalise our industries.