Terrorism, traders and taxes

Many traders do not file their tax returns, but get religious justification for financing madrassas and militants

Terrorism, traders and taxes

Traders get support from clergy for not paying taxes dubbed as un-Islamic. In return, they generously donate money in the name of Zakat to madrassas that serve as nurseries for many outlawed militant sectarian groups working hand in hand with terrorists to get arms and training.

The Federal Board of Revenue (FBR), required under the law to investigate such donations, has never bothered to issue notices to madrassas to file tax returns. The financial lifeline of these madrassas is large sums of money coming from "sympathisers" in and outside Pakistan--major financing of terrorism comes through indigenous sources but our authorities never admit it and shift the entire blame on "hostile foreign forces." The FBR has also shown total apathy to bring these donors into tax net.

Many rich Pakistanis, especially traders, spend lavishly on Umrah and Haj [pilgrimage], sacrificial animals for Eid-ul-Azha [Feast of the Sacrifice], and religious congregations. Clergy vehemently preach that religion means fulfilling obligations like namaz (prayers), roza (fasting), Zakat (charity) and Haj. They keep on emphasising that madrassas deserve Zakat and sadqaats (donations) for their outstanding service to Islam. They successfully convince the wealthy to finance mosques and madrassas as it would wipe out all their sins and ensure a high place in Jannah [paradise].

Many traders, who do not file their tax returns, believing that money collected as taxes by government would go to waste, get justification for financing madrassas and mosques where the poorest of the nations are happily surrendered by their parents. In the name of these students, the organisers of madrassas mint money.

Many religious political parties run huge madrassas and many of their students join militant groups when they complete their "education" as there are no jobs for them in the market.

Since the accumulation of wealth and unethical profiteering are justified by clergy, traders are their natural allies. For tax non-compliant businessmen, adulterating eatables, incorrect measurement, selling defective or substandard products, providing unprofessional services, defrauding customers, refusing to honour promises and violating laws of the land are not considered immoral acts.

There are thousands of madrassas in Pakistan with enrolment in millions proving beyond doubt the failure of the state to fulfill its obligation under Article 25A of the Constitution. For religious parties, politics is a big business--their constituencies are madrassas where peculiar sectarian education is imparted. The religious parties do not get substantial seats in assemblies but enjoy unprecedented street power. The FBR is totally indifferent and does not issue notices to rich politicians, including the heads of madrassas, inquiring from where they maintain luxury SUVs with dozens of security guards.

After taking oath for the third time as prime minister, Nawaz Sharif extended extraordinary benefits to traders who defy tax laws but openly and generously give money to madrassas. Nawaz was ardent supporter of holding negotiations with terrorists and extortionists. In September 2013, his worthy finance minister proudly announced that "all demands of traders [not to pay taxes] are accepted." As expected in 2013 and 2014, majority of the rich traders refused to get registered for retail sales tax but donated billions to madrassas.

In Pakistani madrassas, electioneering and business empires are interlinked. The tax evaders not only finance madrassas but also provide money for elections in Pakistan. These rich and powerful traders keep assets worth billions of rupees abroad. On January 9, 2015, Chairman FBR admitted before the Senate’s Standing Committee on Finance that Switzerland and UAE "are not furnishing information" and that "assets are kept in other names by the tax evaders."

For electioneering and running of madrassas, generous "donations" come from traders. In return they get tax concessions through Statutory Regulatory Orders (SROs) from political elite. Together they make billions through rent-seeking and tax evasion. They invest bulk of this money in real estate in Pakistan and abroad. According to the FBR’s own study, the contribution of traders in income tax is just 0.5 per cent and in sales tax about 1 per cent. Like powerful absentee landlords sitting is assemblies, the traders pay meagre income tax. However, they successfully keep revenue authorities at bay due to powerful political influence they wield.

The legislative history of income tax law is fraught with provisions that were amended and/or re-amended on account of the bazar’s shutter-down threats or violent demonstrations by traders, causing legislators to get cold feet and succumbing to their demands. The governments--civil and military alike--have been extending amnesty schemes to tax evaders to whiten their undeclared incomes and ill-gotten wealth; for example Self-Assessment Schemes of the 1970s, Special National Fund Bonds or Simplified Self-Assessment Scheme of the 1980s, Foreign Currency Accounts or Foreign Exchange Bearer Certificates of the 1990s, various other millennium immunity schemes and the infamous section 111(4) of the Income Tax Ordinance, 2001.

Non-compliance of tax obligation is a grim reality of Pakistan. State has failed to fulfil its basic obligations--protection of life and property, health, education, housing and transport etc--towards citizen. In primary education, madrassas have overtaken the state-run institutes. The overwhelming enrollment is in private non-religious institutions, but enrollment in madrassas is also on increase. Once, the fulfilment of civic and social duties, respect for humanity, tolerance and respect for law had been an integral part of the primary school curriculum, but now it is unfortunately replaced with ‘we are the best’ and ‘rest would go to hell’ syndrome.

Since the days of General Ziaul Haq, the moral life of common man is inflicted by clergy’s view that this world is a temporary place where defying laws and rules of the state is not a vice but not paying chanda (donation) to them is an unforgivable sin. They do not advise the wealthy to establish wakfs for public welfare--once these were hallmarks of Muslim society to care for the less privileged.

It is tragic that over a period of time like many others institutions, mosques have been converted into "clergy" houses, managed and led by people having little or no knowledge of Islam. In this article, we are not going into the details of this deterioration and how monarchy managed to hire mullahs for its perpetration. If we want to fight bigotry, obscurantism and religious militancy, we will have to reform the mosque and madrassas.

The mosques and madrassas should be regulated by state as is the case in majority of Muslim countries. Primary education emphasising respect towards all human beings and laws of the land should start from mosques through highly trained and well-paid teachers. Madrassas should adopt the same curriculum as is in existence in the public/private schools.

A clinic should be opened in every mosque and madrassas. A gym can be accommodated in the Jamia (main) Mosque or big madrassas to cater for the health/free time activities for the youth of the locality. A soup kitchen in the mosque/madrassas can be a vital source of nourishment for the poor. A primary school for children, clinic and gym in the near vicinity would reduce traffic congestion on the main roads as these vital facilities are made available at a walking distance from people’s residence. Besides, when members are forced to meet daily, social and economic issues could also be resolved through mutual consultancies. A feeling of belonging and good neighbourly relations would be a natural consequence of these interactions. In short, much could be gained from making the most out of mosques/madrassas.

The culture of tax defiance and hate-mongering through mosques/madrassas must end. For this it is imperative that state shows zero tolerance towards tax avoidance and religious intolerance. At the same time state must fulfill all its obligations towards citizens expending tax money on their welfare and not for the luxuries of ruling elites-- militro-judicial-civil complex and politicians.

If mosques/madrassas are creating chaos in society, the state is equally responsible for not reforming these institutions and not providing the citizens what is guaranteed under the supreme law of the land--protection of life and property and universal entitlements e.g. education, health, housing, and transport etc.