Time for introspection

Our politicians don't believe in introspection because they think they are infallible - a self-destructive belief that makes them go on committing ever-bigger blunders. Nor do they realise that the saner route to defending themselves is to come out with credible facts instead of tactlessly bashing their critics.
Neither the ongoing disclosures by Transparency International Pakistan, nor the recent report by Chairman NAB, nor that by a press reporter (about MPs' tax evasion) served to drill any sense into the heads of politicians. Instead, the PPP is now poised to pass a bill dismembering the NAB.
These reactions only contribute towards reinforcing the view that politicians are indeed not clean. The news that senior FBR officials were taken to task for sharing with the media the details about politicians not having a NTN, not paying taxes, or not filing tax returns, only magnified the stigma.
According to Plato, parliamentarians should act like "the guardians of the state". Were that to be the case, they wouldn't worry about disclosing their tax payment details. In fact, as the trend setters, they would make these details public voluntarily.
Most of the National Assembly members threatened legal action against media persons who accused them of tax evasion, unless those media persons apologised. Interestingly enough, these parliamentarians did not consider it fit to first provide documentary proof of their innocence.
Undeniably, a parliamentarian who has wrongly been accused of tax evasion has the right to seek punishment for his maligners, but to credibly absolve himself he must furnish proof of his source(s) of income, tax payment, and accumulation of wealth from legal sources.
ANP's Senator Zahid Khan demanded the suspension of the Chairman and member income tax of the FBR. He regretted that whenever the house sought details of a tax defaulter, it was told that it wasn't permissible under the law, but data about the parliamentarians was released to the media.
Shahid Khaqan Abbasi of the PML-N did propose a resolution asking the ECP to maintain a "list" of parliamentarians filing their tax returns to avoid their vilification, but didn't go as far as requiring the FBR to provide ECP the copies of the tax returns filed by parliamentarians.
Only Syed Zafar Ali Shah of PML-N made Chairman NAB's report the basis of his criticism of the government, saying the country would be like an empty vessel if massive loot and plunder on a daily basis went on unabated. Hopefully, he meant what he was saying.
Parliamentarians' (the 'lawmakers') defence of their tax evasion is visibly having a negative effect on society. All the chambers of commerce and the trade associations refuse to obey FBR's legal directive that requires businesses to display their NTN Certificates on their premises.
This all round defiance is inculcating a pervasive culture of tax evasion. Tax evaders, who do so blatantly, give a deadly message - the message that tells the honest taxpayers that they are either un-smart, dumb or simply fools. It is therefore no surprise that the country's tax-to-GDP ratio is declining.
The government's insistence on offering another 'tax amnesty scheme' is a confirmation of the fact that paying taxes is a dumb act. You can go on evading taxes, stash your wealth away in tax havens abroad, and wait until out of desperation you are 'requested' to bring back that black wealth. Parliamentarians are being accused of gross mismanagement of the state that has brought Pakistan and its institutions to the point of bankruptcy, a fact the IMF knows about more than most of us. This is proof of the fact that while tax evasion is on, bulk of the collected revenue is being wasted.
Talking of tax evasion, by first giving his estimate of daily tax evasion at around Rs 7bn and then revising it upwards to Rs 10 to 12bn, what the Chairman NAB did was to quantify the impact of what the Chairman SECP had said earlier, ie, the undocumented economy is as large as the documented economy.
Tax evasion at Rs 7bn a day implies annual evasion of over Rs 2.5 trillion. At Rs 12bn a day that loss works out to over Rs 4.3 trillion. Presently, tax collection is around Rs 2 trillion, and if the Chairman SECP is right, tax evasion too could be to the tune of at least Rs 2 trillion, if not Rs 4.3 trillion.
There are baffling estimates of import duty evasion courtesy wrong declaration of goods, and smuggling via the Afghan transit trade but far more through Pakistan's porous borders. In addition thereto is the tax revenue loss that is caused by over 3 million retailers who insist on staying out of the tax net.
Tax refunds against 'flying' invoices are possible only with connivance of concerned staffers in the FBR who either knowingly pay refunds to businesses that don't even exist, let alone doing business, or don't conduct on site verification of the production and delivery capability of the refund claiming entities.
A list of tax exemptions also includes "sector and enterprise specific exemptions". In FY08, the amount under this head was less than Rs 1bn. The next year this amount rose to Rs 18bn, and in the next four years these exemptions shot up to more than Rs 80bn.
The finance minister has admitted that grant of tax exemptions and waivers cost the exchequer more than Rs 650bn over the past four years. This was followed by the disclosure that, in the first quarter of FY08, tax refunds against 'flying' invoices had cost the exchequer Rs 63bn or Rs 20bn a month.
Add up all this, and you will understand why our parliamentarians appear shocked when these truths are exposed. The saddening part is, that only a handful of politicians support revamping of the taxation system and procedures, and cleansing of the investigative agencies to weed out the corrupt in society.
Tax evasion is a reality as proved by a miserable tax-to-GDP ratio in Pakistan. What makes this tragedy worse is the fact that tax evaders include the majority of the sitting parliamentarians. Yet, parliamentarians never lose an opportunity of demanding the supremacy of parliament.
Can such a parliament really do so? A parliament can demand supremacy only if its own conduct is crystal clear, which is hardly the case with Pakistan's sitting parliament. This is the view not just of the Pakistani media, but also of many foreign governments and independent bodies. It is time parliamentarians examined and drastically improved their conduct instead of bashing their critics; their bashing won't help.