"Loss leaves us empty - but learn not to close your heart and mind in grief. Allow life to replenish you. When sorrow comes it seems impossible - but new joys wait to fill the void."
PAM BROWN:
The Wealth Tax Act, 1963 was abolished through the Finance Act 2003 on the specific demand of ex-Prime Minister-cum Finance Minister Shaukat Aziz before charge as Finance Minister of Pakistan. He being an intelligent man was fully aware of the fact that by virtue of his status as resident in Pakistan, his world assets would attract provisions of the Wealth Tax Act culminating into substantial tax liability on annual basis.
After 9/11, since the country was in a "critical state" (as portrayed by Musharraf) where the services of one individual were totally indispensable, the repeal was shown to be justified despite tremendous revenue losses, and the resultant misery inflicted on the majority of the people of Pakistan.
Today, our financial wizards are talking about financial impediments inter alia fiscal deficit of 9 % of GDP and extra borrowing of over Rs 5 billion, mercilessly wasted on the endless non-developmental expenditure, lavish perquisites of the ruling elite and to make good this loss, the only option in their view is raising the prices of oil (knowing very well that such raise triggers rise in cost of living pushing the poor strata further down the poverty line). Instead of resorting to recovering all losses from the poor and hapless of this country why is not any attempt being made to recover from those who are actually responsible, some being beneficiaries of loan write-offs? Is it because in doing so, they themselves will have to bear the burden as well?
In 2002 before its abolition, wealth tax was the only progressive tax left in Pakistan with tremendous potential for growth, if exemption given to the rich absentee landlords were scrapped. This became obvious immediately after its repeal when billions of rupees (estimated at US $60 billion) started pouring in from all over the world remitted by all and sundry without any fear of being investigated, courtesy amnesty given in section 111(4) of the Income Tax Ordinance, 2001.
Influx of enormous wealth was directed to the stock exchanges where the dominant stake-holders continued to gobble the small investors through unholy maneuverings; or was used to enhance real estate dealings. With no wealth tax to pay, both these avenues helped to increase individual wealth but dreadfully stripped the entire nation of its right to live in peace and economic prosperity. This also soared up investments in non-productive sectors, with people refusing to take risks on industrial projects that could have proved more beneficial to the masses.
The high tendency to make easy money through stock exchanges and land dealings has resulted in retardation of economic growth for the poor, whose life is totally dependent upon earning daily wages. The last five years have negatively flung Pakistan's economic condition not just ten years back, but many decades. With marked rise in population, with no attempt to increase resources or even improve the existing ones, with the divide between the rich and poor touching dangerous levels, with continuous political turmoil and to top it all, reliance on an extremely regressive tax system, one can confidently say that our country is now on the threshold of economic collapse unless serious measures are adopted to veer it off this perilous track.
What is preventing our elected coalition government's highly qualified finance ministry from recuperating billions of worth of taxes by restoring the Wealth Tax Act? Instead of increasing oil prices (where per litre tax component is over Rs 25) why no attempt is being made to impose heavy taxes on those who enjoy colossal wealth and who have the ability to pay?
Looking at the Press reports, it is disturbing to see that some of our retired generals are adjudged as the richest in the world by TIME magazine. Besides, our elected representatives in the past have proved that they are far better at asset and wealth management than fund managers and investment bankers of Pakistan. These people are extremely competent at creating personal wealth but prove utterly hopeless in increasing national wealth for now nearly 180 million people of this country.
The rich Prime Minister-cum-Finance Minister did not establish any charitable institute by giving donation out of his mega wealth, nor are the present ones ready to do so. On the contrary, the National Police Foundation "allotted" two plots to him in E/11, Islamabad at throwaway prices of Rs 1.1 million and Rs 0.24 million which, within a year's time attained market price of Rs 12.5 million and Rs 1.5 million and in 2008 rising to thirty times the original price paid! Supreme leader of King's party, PML(Q), Chaudhry Shujat Hussain, another exceptional wealth manager who pole-vaulted from net wealth of Rs 74 million to Rs 146 million in just 12 months (see his latest declaration before the Election Commission).
These two examples are merely illustrative of the over-all pattern of phenomenal increase in the wealth of ruling elite: powerful civil-military complex, greedy politicians and unscrupulous businesspersons.
Over the last many years, tax policies have been formulated serving the interest of billionaires (including the ruling elite, wealthy generals and high-raking civil bureaucrats, industrialists and rich property owners) and that too at the expense of the poor.
-- In the last two years alone, revenue loss on account of income from property is estimated at Rs 80 billion as per survey of the PT-1 forms of the Excise and Taxation Department of the Government of Punjab.
-- Increased dependence on presumptive taxation has deprived the exchequer of Rs 150 billions of rupees in the pharmaceutical sector alone.
-- From 2003 to date, according to a conservative estimate, we have lost Rs 50 to 70 billions worth of wealth tax that could have been imposed on unaccounted/untaxed wealth amassed by those already enjoying the privileges of a luxurious life.
Claim of the authorities that wealth tax was useless as it did not contribute much to the exchequer (see government-fed report in Business Recorder dated 3rd May 2008) speaks of the rigid target-oriented mindset that taxes are only meant to raise revenue. They forget that wealth tax may be an outdated levy in civilised countries of the world (after achieving the supreme goal of creating an egalitarian society) but was specifically introduced in the Sub-continent because of the tendency of third world nations to invest in unproductive areas as gold, real estate, bank balances or even cash tucked away in hidden vaults. It was meant to discourage hoarding of precious wealth and directing it towards constructive sectors and economic growth, for which innumerable incentives were provided in the Act.
Many of our political elite have been found to be owners of unfathomable wealth, safe in Swiss banks and foreign countries. If they claim to be true representatives of the people, they owe it to this country to bring back all this wealth and if not surrender to the nation, at least be prepared to pay tax, due on it.
Besides, it is a fallacy which we have proved many a times that tax authorities can investigate into unexplained investment, expenses etc. Section 111(4) of the Income Tax Ordinance has rendered them helpless as it allows the taxpayers to whiten illegally earned income through an extremely simple and easily available procedure by going to a money exchanger and getting fictitious foreign remittance in his account after paying a nominal premium of 1 to 2 percent of the entire proceeds!. It is irrelevant to delve into such details at this juncture but suffice to say that section 111 is no remedy vis-à-vis taxing enormous wealth generated from untaxed and/or ill-gotten income/wealth.
THE NATION DESPERATELY OWES EXPLANATION FROM ALL THOSE IN POWER:
-- Why the privileged are continuously being favoured and poised against their own poorer brethren?
-- Why is it that ordinary taxpayers having income of more than Rs 500,000 are required to submit annual wealth statements whereas rich and mighty politicians, who have exempt agricultural incomes have not yet made public their declarations of assets?
-- Why do they hesitate from paying wealth tax but charge Rs 25 per litre tax on petroleum products knowing very well that it is massively consumed?
-- Why not restore earlier subsidy on petroleum products and make good the loss by levy of wealth tax?
-- Why not curtail unnecessary and extravagant expenses on the establishment starting from the President house, to fill up the void?
-- Why not reduce the number of ministers/advisers instead of following policy of appeasement and doling out public offices as if this nation was not burdened enough by worthless and incompetent bureaucrats?
Despite the bleak scenario, there is always a ray of hope that wisdom will prevail and someone whose heart is fraught with patriotism in the true sense of this word will rid this nation of the neo-colonial subjugation to those who are constantly dictating their terms to a leadership that is oblivious to the people's woes and misery.