Pakistanis pay lowest tax in the world: Tax Ombudsman

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“Pakistan’s tax to GDP ratio that was 13.8 per cent in 1987-88 has declined to 8.5 per cent during 2010-11. This has led to a tax revenue loss of Rs. 900 million per anum which is a significant drain on national resources”, says Federal Tax Ombudsman (FTO) Dr Shoaib Suddle. He was speaking to businessmen at Faisalabad Chambers of Commerce and Industry (FCCI) during his brief visit to Faisalabad. “It is very unfortunate that people in Pakistan deliberately avoid paying taxes despite their strong religious sentiments”, he said.
“Colonial rule over the subcontinent bred contempt against the ruling elite who were thought to transferring the country’s assets abroad but the tax evasion culture continue to flourish even after the colonial era”, he said. Analysing the tax revenue Dr Suddle said that one per cent decline in tax to GDP ratio means that we are losing Rs150-200 million revenue in terms of tax collection. “A general perception is that people want to know what will the state give them in terms of facilities and pay backs if they pay their due share of taxes”, he said. He said that Pakistanis pay lowest amount of tax in the world.
The Federal Tax Ombudsman, who unfolded his outreach program to be easily accessible to a wider community of tax payers, announced to set up an FTO sub office in Faisalabad to address the grievances of tax payers in the industrial city. “Faisalabad is the first venue for the opening of a sub office and we are looking forward to open more such offices in Sialkot, Gujranwala, Multan, Abbotabad, Sukkur, Hyderabad, and Larkana”, he announced. “The decision to open Faisalabad office was taken after it was revealed that more than 40 per cent cases at provincial office in Lahore belong to Faisalabad”, said Dr Shoaib.
Dr Shoaib Suddle was eager to quote the Transparency International’s report titeld Citizen Report Card Study that termed FTO as the cleanest department of public sector in Pakistan. “The objective of this independent research was to assess the quality of taxpayer’s interaction with the FTO during 2009-10”, he said.
Dr Shoaib Suddle gave an overview of his two years performance as FTO towards improving the working of institution through capacity building of working staff. “For the first time since the inception of this office, more than 196,000 complaints were disposed during 2010”, he said. During the same period, an overall sum of Rs7 billion was refunded to tax payers as compared to an average refund of Rs2.30 billion per anum. This is 31 times more than the past years payments.
He said that with the installation of a state of the art Information and Communication Technology (ICT) in FTO, the tax payers can file their complaints online without wasting much time standing in the queues. “A more significant feature of this procedure is that they would be able to follow up their cases online with the help of a tracking system that will continue to update the complainants about the progress of their cases at various stages of the probe”, he said.
Dr. Suddle interpreted the key features of his office during his speech. “We have to deal with the maladministration of the tax functionaries”, he said. “This maladministration results from the chronic and endemic inefficiency that permeates the tax establishment and repeatedly manifests itself in delays, actions contrary to law or actions contrived to harass for corrupt motives or actions based on sheer ignorance of law and rules or a range of other acts of omission or commission as defined under Section 2(3) of the FTO Ordinance”, he added. Here is pertinent to note the comments of a renowned blogger Riaz Haq who wrote: “Pakistan’s tax policies are among the most regressive in the world. Direct taxes make up less than 3.5 percent of GDP, with wide ranging exemptions to powerful segments of society coupled with governance issues at Federal Board of Revenue, according to former . The bulk of the tax receipts are collected in the form of sales tax, placing the heaviest burden on the lower-income people who spend almost all of their income on their basic needs”. The World Bank (WB) has said in an earlier report that every Pakistani citizen evaded tax amounting to Rs4800 in the year 2007-08, while the total tax evaded in the period stood at Rs796 billion. However, the economists say that these figures have substantially increased during the last three years during the scandal ridden governance of Prime Minister Yousuf Raza Gilani.



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