VESTED interests have destroyed tax laws and as a consequence Pakistan’s development. The tax department, in nature, is an anti - corruption tool in the hands of a state, and if it functions effectively, there is no need for any other anti - corruption department. A study of tax administration of various states shows that developed countries concentrate on generating local revenue by adopting uncompromising policies towards the enforcement of tax laws.
They have stronger revenue law - enforcement agencies for generating indigenous revenue and eradicating corruption. In the US there are stern anti - avoidance laws and a strong revenue collection agency IRS, which has been vested with extensive powers to fulfil the budgetary needs.
In our neighbouring country, the Indian IRS is always in news, some time for raiding celebrities’ homes and some time for arresting high - profile personalities. Not only this, the Indian department of direct taxation has established an office in Abu Dhabi to keep an eye on investments made by wealthy Indians in the emirates.
In all developed countries, there are a number of cases where high - profile and renowned personalities have been convicted of tax evasion.
Contrary to this, in Pakistan, which has least tax compliance level, there is not a single case where anyone has ever been prosecuted for tax evasion. In the US, the penalty for non - filing of return is one year imprisonment, along with monetary penalties, and any wrong declaration in the return of income is construed as tax fraud for which a person is sentenced to four years of imprisonment. In Pakistan the penalty for non - filing of return of income is Rs5,000 only.
Revenue generation requires monitoring of the posh areas and business places but this is not possible without an efficient and well - equipped intelligence network. Instead of developing such an intelligence network, inspectors of the department are told to have been barred from moving into markets and business premises of the taxpayers on the so - called pretext of blackmailing of taxpayers. This has encouraged tax evasion and tax fraud.
In order to provide relief to people, there is a need for eradicating corruption, improving the law and order situation, ending the energy crisis, inflation and all other problems by reforming tax laws and strengthening the tax administration to collect taxes from business tycoons, industrialists, feudal and the other wealthier and powerful strata.
The offices of IRS should be established at town level to facilitate taxpayers, and to ensure monitoring of people liable to taxation so that Pakistan can generate its own revenue, and we don’t have to beg for money from international donors.