Menace of tax evasion: owners of 90 percent state resources pay only five percent of taxes

An England based Pakistani expert of tax laws and researcher of Pakistan taxation system S P Jami says that an unholy anti-people alliance of the trio of influential civil-military bureaucrats, corrupt and inefficient politicians and greedy businessmen while controlling and enjoying at least 90 percent State resources contribute lower than 5 percent in the national revenue collection.
Addressing a news conference here at Lahore Press Club (LPC) on Friday, Jami said, members of the Senate, National Assembly and Provincial Assemblies deriving substantial agriculture income are not paying a single penny in the national exchequer in the shape of their personal taxation of agriculture income since assessment year 2000-01 when the tax was converted from land-based to income based.
Whereas after the recent floods the government is contemplating levying further taxes to increase the resources for restoration of flood affected areas and the relief of flood affected people but the brunt of the additional taxes would also be borne by the common man, Jami added.
He said it is incorrect that agriculture income is exempted from income tax as taxation of agricultural income is the sole prerogative of provincial governments under the 1973 Constitution of Pakistan which debars Federal government to levy tax on agriculture income. All the four provinces have enacted agricultural income tax laws and from assessment year 2000-01 the agriculture income tax has been made income based instead of earlier mode of land based.
However, Jami said, none of the provincial government is either enforcing the levy and collection of income based agricultural income tax or the big landlords mostly sitting in the assemblies are voluntarily paying the same by filing their agriculture income tax returns. It is still being collected as land based tax instead of income based. That is why total collection by all the provinces in 2009-10 was only Rs 2 billion against actual potential of Rs 200 billion as share of agriculture in GDP is about 22 percent.
Jami contended that President Asif Ali Zardari owns substantial land of his own and inherited from late Ms Benazir Bhutto but reportedly he has not filed income based agriculture income tax return and paid income based tax.
Similarly, he has not filed his income tax return whereas as per Section 114 (1)(b) of the income tax ordinance 2001, every person holding immovable property or owning a 100C motor vehicle of holding National Tax Number is required to file his personal income tax return even if no income has been derived. Jami further claimed that the late Zia-ul-Haq never filed tax return in his lifetime.
On notice from the department, his legal heir filed tax returns from assessment years 1977-78 to 1988-89 declaring salary income only. Whereas, separate returns were filed voluntarily by Ms Shafiqa Zia-ul-Haq showing rental income from two properties.
The Income tax officer disregarded those returns and taxed the rental income in the hands of the late Zia-ul-Haque because as per government record both the properties stood in his name. On appeal, the Income tax appellate tribunal upheld the taxation of rental income in his hand. Jami further argued that after the recent floods President Asif Zardari, Mian Nawaz Sharif, Mian Shahbaz Sharif, Altaf Hussain and former President Pervez Musharraf have announced substantial donations for the flood affectees.
Whereas the public at large is skeptical about their sources to make the aforesaid donations and the intention hereof when the tax affairs and the assets held by all these persons remain a mystery.
He said these leaders have never asked their party parliamentarians to pay taxes regularly and especially, the agriculture income tax. Rather, all the four chief ministers are turning a blind eye on non-filing of agriculture income tax returns by their MPAs to avoid the resentment and to maintain their majority in the assembly.