LAHORE: The realization that the government is sitting on huge data showing no tax paying high income brackets is not new. It only took steel nerves to grasp them. Does this regime have the muscle to do that?
The finance minister has warned tax evaders to come forward and pay the taxes due, otherwise the state would steal taxes from them. He said the government aims to increase the tax rate to 11.5 percent.
This goal could be achieved by only reacting to 20 percent of the available data and saving the remaining 80 percent.
The data mine is huge and if the right measures are taken the tax rate could rise to 20 percent.
Every monetary transaction (notable) by a computerized national identity card holder is recorded in the database of the National Automation Data Regulatory Authority (NADRA). When a person buys a vehicle, the NADRA system records it under their CNIC. The purchase / sale of real estate and agricultural land is also documented.
The record of all trips abroad is recorded in each CNIC. Hotel stays and bills paid can be found in NADRA’s CNIC data. Club membership and annual sales can be accessed from the NADRA database. Even school or education fees above a threshold are included in this data.
The recording of these dates began in 2000 during the regime of General Prevez Musharraf. Even the dictator could not benefit from this data as many fraudsters were very influential members of society. Occasional action was taken against low-end retailers such as small retailers or political opponents.
Every government that took power afterwards threatened to use this data to bring tax evaders into the tax network.
In fact, the manual tax collection conducted during the Musharraf era showed that many families living in the posh and most expensive areas of all major cities paid no taxes at all, despite a lavish lifestyle and fleet of expensive cars. Even then, they were not arrested by any government.
This regime also knew about the data goldmine, but never acted. There was no need to warn tax evaders. Tax evasion is illegal and the perpetrators should be booked without warning.
You do not ask a thief to return the stolen property, otherwise action will be taken against him. When you know the culprit, you need to act quickly.
This government announced some amnesty programs over the past three years to get tax evaders into the tax net, but the response has been lukewarm. At the beginning of all amnesty programs, it was announced that the government had data and would take tough measures if black money owners fail to raise their wealth through an amnesty scheme by paying a nominal tax.
No action was taken after the amnesty regulations expired. Arresting the tax thieves is not a huge task, especially when authenticated NADRA data is available. It just takes strong political will. It required fair and transparent operation.
Tax evaders are on both sides of the political divide. Just as charity starts from home, so should accountability start from home.
The government should first catch the tax evaders in their ranks to show the others that they mean business.
It would be folly to start with a political opponent when the same kind of circumvention is taking place within your own ranks. It would be called political victimization. The company should be apolitical and fair. When people are arrested by the government it creates the impression of impartial accountability.
The FBR had previously issued thousands of reports to the tax evaders from the data in its possession, but this did not increase tax compliance.
News of the notices that had been issued was circulated in the media, but the media did not keep itself informed of the outcome of the notices.
It appears that the notices were either wrongly issued or that the alleged tax evaders “settled” the matter with the FBR.
Let us hope that this time the Finance Minister will be serious and sincere and that the data available will not be compromised. We must see that measures against everyone and everyone are taken fairly and transparently without exception.