I recently came across a piece of news that our government is rewarding the tax payers. Great, isn’t it?!

But when I went through the details, I wasn’t so sure about the virtues of this move. According to the news, the FBR (Federal Board of Revenue) identified 400 top tax payers and the prime minister announced rewards for them in the form of a privilege and honor card that carries several perks. The tax payers are divided into four categories: salaried individuals, non-salaried individuals, association of persons and companies. Here are the tax amounts of the top three honorees in each category (figures are in million PKR):

Salaried IndividualsNon-salaried IndividualsAssociation of PersonsCompanies
189,910,478749,008,253496,882,50336,963,745,646
159,149,750210,332,864464,893,37615,404,269,282
158,858,269174,246,502424,226,71711,786,705,153

 

After taking a look at this list, one thing becomes crystal clear: the majority of the people in this country will never become a part of this [yet another] elite club. Although we pay the lion’s share of taxes, we still don’t qualify. I will explain in a little bit about how much we – the working stiffs – pay in taxes as opposed to the rich and famous.

It is not unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.” Adam Smith

Once the awe factor (due to the amount of earnings of just 400 persons) wears out, let me ask a question: these people paid their due taxes, which was their responsibility as a citizen of this country; why are they being rewarded for doing something that was their duty in the first place?

Who Pays Taxes in Pakistan?

Ask this question and you will hear all sorts of answers but not the mention of the real tax payers. Most big businesses and companies claim that they pay billions in taxes and carry the burden of the rest of this country, especially the marginalized segments of the society. More or less, this claim is accepted as the actual representation of the situation. How true is it? When talking about taxes, the majority of the times, only the direct taxes are mentioned; but in reality, the indirect taxes are filling the major part of the national exchequer. It is estimated that approximately 25 percent of the revenue is collected through direct taxes and the remaining 75 percent through indirect taxes.

You see what’s happening here? It is you and I who are paying through our nose in the form of indirect taxes and not getting credit for it. Let’s look at an example:

Let us assume a high income individual pays Rs. 80 as taxes on daily essentials, a middle income person (from the next 20 percent population) contributes Rs. 70 a day and a lower income person Rs. 50 per day, as the essentials items consumptions is not much different across the segments. With total population being 180 million, top 10 percent would pay Rs. 1.44 billion; next 20 percent Rs. 2.52 billion and the lowest 70 percent would be made to pay Rs. 6.3 billion – almost double the contribution of the upper and middle income groups. The situation can be crystallized through some empirical studies but prima facie it is the poor segments of the society which bear most of the burden of taxes in Pakistan.” (Aziz Nishtar, a Harvard University law graduate, and a development consultant specializing in tax, corporate law, governance and economic development.)

We Want Some Credit Too

Isn’t it time, we, the people, also get a break and the fat cats start carrying their weight? All of us know the list of the people who are getting a free ride in this country. The Prime Minister of our country paid PKR 5, 000 in taxes last year. I mean, come on!! The majority of our politicians, the agricultural sector and pretty much anyone who can get away with it is getting away without paying taxes. Paying taxes is the responsibility of all of us and we should feel proud that we (the common folks) are carrying the burden. Now, our government should start giving us some credit too. We don’t ask for privilege cards; just fulfill your responsibility by paying your taxes and actually widening the tax-net not deepening it by squeezing the life out of the common people.

Image Credit: www.SeniorLiving.Org