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Simplicity of the tax system is however the name of the game

Jun 12 - 18, 2000

The constant liaison between the government functionaries and representatives of the trade bodies has started giving signals that the unprecedented country-wide shutter down strike for the last two weeks is about to come to its logical conclusion.

But the game was not worth the candle. The national economy already struggling for survival had to suffer a revenue loss running in billions. The loss of CBR-related revenue, according to a safe calculation was over rupees a billion per day while the total loss to overall economy is estimated at Rs30-35 billion as a result of the strike.

The worst hit segment of the society was the daily wagers who were left with no option but to pray as a last resort for return of normalcy. The pinch of the strike was equally felt by the affluent class i.e. the industrialists that also lost their patience due to continuous shutter down strike of the traders who provide the main outlet to their products.

The industrialists took out a car procession befitting to their status to press the government for an early end of the strike. They terminated their protest car rally at the gate of governor in Karachi to present a protest note to Mohammad Mian Soomro, the governor of Sindh, conveying their grievances arising out of the strike. The continuous strike by the traders and all major markets brought a crippling effect on the industrial areas which came under tremendous financial crisis as their operational as well as financial cycle was stalled due to prolonged strike.

All these developments are enough to establish that the ugly situation created as a result of strike caused a nuisance situation for all segments of the society including the poor, the moneyed people and the two parties i.e. the government and the traders as well.

The question however perturbs the mind that when everybody was disturbed due to this unprecedented strike then who was the beneficiary of the situation? Why the traders, who generally avoid indulging in any confrontation, gave such a massive response to the strike call which is not possible even for many top political leaders.

Analyzing the situation in a crude way one can easily reach to the conclusion that the trader leaders have not such a strong charismatic personality which can spell bound the traders to shut down their business for such a long spell all over the country.

In fact responsible for creating such an ugly situation were those who flouted the policy of simplifying the tax collection system declared by all the governments including the present one time and again.

Sheikh Javaid, Chairman Investors Council of Export Processing Zone feels that its seems to be a deliberate effort on the part of vested interests who have pitched the business community against the government by creating problems. These elements creating a situation to flop the government efforts to restore the economy of Pakistan on sound footings, he alleged.

Sheikh Javaid, who is a senior member of the business community also feels that most of the time the business community is misled by false representatives who have managed to buy a prominent position in different representative bodies to remain in the limelight.

Instead of simplifying the complex tax system, the Tax Survey Forms, currently being distributed by various teams of the government, were designed in such a complicated way that it is beyond the reach of a person with normal education. Although the tax survey forms are bi-lingual both in Urdu and English there is an instruction on top of the form that it should be filled in English only. No one can deny the fact that over a period of time, a tax evasion culture is deeply rooted in our society. People liable to pay tax are always find pretexts to avoid taxes. Whosoever is responsible for designing such a complex tax survey form has provided a good excuse to those who are prone to tax evasion. Situation in our society demands that to tame the tax evaders there should be a form with hardly four or five basic questions with out any language barriers.

It is unfortunate that those who are already in the tax net have always been squeezed to meet the revenue. While those who have managed to remain out of the tax ambit in connivance with tax collecting agencies are afraid of the documentation because of their ill-gotten money.

Under this scenario, the size of direct tax collection is hardly 15 per cent while 85 per cent indirect taxes proving a backbreaking burden for the common man. The poor have to pay heavy indirect taxes on items essential for life including all utilities, transportation, health etc at par with the affluent class due to non-documentation of the economy.

The present government has come out with a firm determination to bring the wild and free informal economy to the not of documentation. Let this process of documentation be accomplished to give relief to the economy as well as to a large majority of this country living below poverty line. Simplicity of the tax system is however the name of the game.