Tax compliance - a national duty

By: Muhammad Nadeem Bhatti      Published: 08:18 PM, 20 Aug, 2021
Tax compliance - a national duty

The tax is a compulsory financial charge or fee imposed by any government on an organization or individuals to collect revenue for community works providing the best infrastructure and basic facilities just like it is mandatory for the brands to advertise their product in order to gather more profit. The fund collected is then utilized to sponsor different public outflow programs. For the business to grow and expand, there have to be decent infrastructures such as electricity, telephones, and roads. When the tax collected by the government is spent on development, it promotes economic activity all over the country. Its concept is also important to enterprises as government can account this capital into the economy in the form of loans. Moreover, tax help in enhancing the standard of living in a state; the higher the living standard, the higher & stronger the level of consumption but it also depends on departments that they should spend the capital with transparency on the citizens.

There are various types of taxes in Pakistan such as sales tax, income tax, etc. But the tax system of Pakistan particularly continues to remains under-perform, in its capability to generate satisfactory revenues. Most important taxes like corporate and personal income tax and GST (General Sales Tax) remain narrow as well as the level of tax dodging is high for a very long time. In recent years, the GDP (Gross Domestic Product) to-tax ratio has seen a substantial drop. Contrary to this, in recent years, macroeconomic fiscal adjustment has been on the spending side of the economy. The country's requirement for spending on basic social services such as infrastructure, health, education, justice, and electricity, are likely to rise in the future as the government is following the strategy of constant economic growth. While expressing a desire to increase tax collection, most political manifestoes carried forward by political parties spell out major expenditure programs. To reach the desired taxation level in Pakistan, an in-depth policy reforms programme needs to be formulated by policymakers. This will require a detailed analysis of tax structures and tax administration.

The Federal Board of Revenue is a federal law implementation agency of Pakistan that examines suspicious accumulation of wealth, tax crimes, and money laundering. It operates through tax examiners that keep tax defaulters under observation and perform distinct tasks for the head office. FBR also performs the role of tax collection in the state from all businesses and individuals. Above all, FBR gathers intelligence on tax elusion and manages tax laws for Pakistan’s government and performs as the core revenue collection agency of the country. Lahore’s RTO is very sluggish in the matter of bringing people to the tax net. Whenever he is contacted by the additional commissioner’s headquarters, he refused to provide their work details. Even they show they are very busy but in actuality, they are doing nothing regarding (POS) Point of Sales. On the other hand, Faisalabad’s RTO chief commissioner (Mahmood ul Hassan Jafri) is working hard but people are not willing to become filers and pay their income taxes. Even around the clock tower in Sootar Mandi, people are doing businesses on small stalls (through parchi system; making around 100 million a day) and still they are not ready to show their real incomes to the departments. Moreover, PHA (Parks and Horticulture Authority) Faisalabad has given the contract to collect advertisement fee (Tax) from the entire city to Amelious Legal Consultants, a few years back. But, now, whenever the advertising company asks for a fee from a popular Multinational Burger Brand with a lot of written reminders, their representatives always refuse to pay that. The question is; why the brand is not paying its advertisement fee (Tax) to the agency. Contrary to paying tax, the Burger Brand has got a stay order from the civil court. As soon as the duration of their stay order ended, they applied to stay from Lahore high court, but the honourable court did not continue their stay order. Even the court asked to pay their remaining dues to ALC. In this regard, Asma Ijaz Cheema (Director General PHA) took a bold step by making joint action with the help of local police to remove all advertisement hoardings. Astonishingly, they are still not ready to pay their dues.   

According to the survey of FBR (Federal Board of Revenue), Karachi is the highest tax-generating city. In fact, the collected tax from Karachi's six large markets is higher than the combined tax collected from Rawalpindi, Lahore, Islamabad, and Faisalabad's biggest markets. Moreover, the FBR examined the markets of Tariq road, Saddar, Clifton, DHA, Golimar, and Gulistan-e-Jauhar and came out with the result that they collectively pay taxes of more than Rs. 30 billion. Contrary to that, Lahore's four main markets paid only Rs. 570 million in taxes, including Mall Road, Anarkali, Liberty and Hafeez Center. Also, major markets from Islamabad paid only Rs. 1.90 billion in terms of taxes. The markets include; Blue area, Supermarket, Jinnah Super, and F-10 Center. FBR’s survey clearly stated that only Karachi pays more tax than the entire Punjab province. Most of the countries around the globe are held in serious health issues nowadays. Talking about Pakistan, the country is suffering from serious health, energy and financial crisis. In these scenarios, Multinational companies are doing businesses in the state and generating profits of millions of $. But when they are asked to pay their taxes, they are not willing at all to do that. Even they are not paying advertisement fees for a very long time. On the other hand, inflation is at its highest recorded level due to the low collection of taxes. Also, the government has to take loans from other countries to spend according to its set budget. So, it is mandatory for the people to pay their taxes so that our country can again stand, rise, and shine.

The Writer is a Senior Economic Analyst & Chairman Pakistan Columnist Council. Can be reached at

Categories : Business