What any one will say on being told that in a country with an estimated population of more than 190 million people, only 0.7 million, or maybe even lesser, had filed the income-tax returns this year?
Quite obviously, the response would be that it is sheerly disappointing and there will be a wish that may the performance of the agencies concerned become better than this as only it can build a strong national economy that will keep moving forward in a progressive and forward-looking manner. At the same time, one would also wish that the people, who fall into the bracket of taxpayers with taxable income, would be filing their tax returns honestly and sincerely considering it as their national obligation as well as a tool to ensure that with their tax money the government, with whosoever in power, would be providing basic amenities and facilities to the people at large in the urban and rural areas alike.
Documentation of national economy has been there at least on the papers for quite some time but still it was far from being actually enforced and implemented. This is mainly due to lack of political will and commitment on part of those treading the corridors of powers, irrespective of their political affiliations as such. This was another victim of vested interests of those strong, influential and powerful enough to dictate things and continue calling the shots, no matter which party was in power.
Needless to say that strong and growing national economy meant that the country was strong to a great extent in terms of security and defence despite many internal and external challenges like militancy, extremism etc. Due to lack of documentation, the national economy remained considerably weak. Resultantly, Pakistan could not see eye to eye with its hostile — though apparently friendly — neighbour India.
Every time Pakistan goes to International Monetary Fund (IMF), World Bank and other donor agencies for more assistance and help, they bluntly point out lack of documentation of national economy and ask Pakistani government to do more and more in this regard and set its own home in order first.
Due to an absolute lack of documentation of national economy, number of taxpayers has been declining over the years despite tall claims of an appreciable increase by Federal Finance Minister, Senator Ishaq Dar. According to the latest figures, about 0.7 million taxpayers had filed their tax returns this year. Only last year, the number of filers was around 0.850 million. Those filing income tax returns with the Federal Board of Revenue (FBR) mainly came from the corporate sector and the employees of the federal and provincial governments which numbered about 2.2 million and whose income tax was deducted at source.
This figure of about 0.7 million taxpayers , as mentioned above, was indeed a very sad reflection on the performance of the FBR and more importantly on the federal government of PML (N) which seemed to be failing in attaching due importance to the issues related to national economy, what to talk about setting out priorities relating to other problems the nation is faced with.
In fact, right from coming into power, the incumbent government should have taken all its allies and others on board to discuss and deliberate on the national economic issues and comprehensive and effective policies should have been formulated thereupon for tackling these issues on priority basis.
Some economists opine that the decline in number of return-filers during the previous PPP regime should not have been surprising because the government had never made any claims of having any interest in working on the economic front. Some even pointedly state that whenever the PPP comes into power, the country and the national economy do suffer every time, be it the nationalization policy of Zulfikar Ali Bhutto or the tenure of Asif Ali Zardari, the masses did not get benefit. But, on the contrary, the PML(N), all through these years, had been claiming that they have prepared their economic reforms agenda as they well understand the economic issues. But, unfortunately, the present Nawaz Sharif government had not been able to come out with any appreciable performance on the economic front so far.
The incumbent government claims to have significantly cut down the POL prices during the months of November and December 2014. This “laudable achievement” in a very crude manner was due to noticeable decrease in the oil prices in the international market. The government had no option but to do this because the pressure built by the people in from of very long PTI and PAT sit-ins in Islamabad.
It is generally believed that facts and figures speak louder than words. So, here is some data of how and why there had been rapid decline in the number of income-tax returns filers over the last few years. These numbers have been gathered from official and other reliable sources and would also go a long way to show how documentation of national economy had been an elusive dream.
As a matter of record, as many as 600,000 taxpayers had mysteriously disappeared from the tax net in just one year which reflects the incompetence and mismanagement of the country’s top-level machinery. According to FBR, out of taxpayers’ number of 1.44 million for 2011-12, who have been paying tax regularly, 856,983 could be traced at their homes and workplaces while 583013 taxpayers could not be traced. This was revealed when FBR tried to locate the taxpayers at their given homes/ workplace addresses with the help of Nadra.
And as per facts and figures submitted tothe Senate in December 2012, number of taxpayers in the country had shrunk to almost half over a period of three years — only 0.81 million people had filed tax returns for FY 2011-12 though higher number of more than 3.3 people were possessing National Tax Number (NTN). It was submitted that 1.6 million had filed income-tax returns for 2009-10, which came down to 1.5 million in 2010-11 and had slumped to 0.81 million in 2011-12. As many as 7.5 million people across the country were reported to be well-to-do but they were not paying taxes. Significant segment of the national economy remained undocumented.
There were some industrialists, feudal lords and influential people who enjoy tax exemptions to a whopping Rs 478 million. A senior economist, the former Chief Economist of the Planning Commission, Dr Pervez Tahir, was some time back reported to have remarked that every SRO (Statutory Regulatory Order) was issued on the pressure of vested interests and influential people. This was yet another sad reflection on the Federal Government’s lack of political will.
It is worth mentioning that while only 0.6 percent of population pays taxes in Pakistan, the ratio is 4.7 percent in India, 58 percent in France and still higher at 80 percent in Canada.