The overwhelming majority of poor and helpless voters-many of them victims of worst floods this year as well-after listening for days to marathon speeches of their representatives in the joint sessions of Parliament have come to the conclusion that the present system favours and protects the privileged classes alone. There is no doubt left in their minds now that resources of this country are not meant for them. What really has offended them is apathy of Parliament members towards their plight, looking down upon demonstrators and even referring them as ghussbathhiay (infiltrators) and khanabadosh (gypsies).
Our ruling elites-indomitable militro-judiciary-civil complex, inept public office holders, greedy businessmen-turned-politicians and powerful absentee landowners-in the name of democracy and constitution blatantly usurp rights of the people and enjoy a lavish life at the expense of taxpayers' money. They indulge in self-righteousness, self-praise and infighting for acquiring more and more power and money by all means. They are captives of self-interest and victims of self-aggrandisement. The concentration of power and wealth in their hands, coupled with lust for control, frequently give rise to institutional confrontations and civil commotion. The confrontation between Nawaz Sharif and duo of Imran Khan and Tahirul Qadri should be seen in this perspective-it is not at all for change of system assuring empowerment of the people which is conspicuous by its absence in Khyber Pakhtunkhwa where Pakistan Tehreek-e-Insaf is ruling in collaboration with Jamaat-i-Islami and to date, local body elections are not held.
The politics of dharnas (sit-ins) has at least highlighted important issues like grabbing of public property and non-payment of taxes by the elites. They get many tax-free perks and benefits while the poor die of hunger, floods and diseases. Imran and Tahir have rightly highlighted these facts in their daily sermons. Hopelessly, the members of Parliament have been trying to refute the incontrovertible facts by resorting to rhetoric and self-claimed defenders of democracy and constitution. How can they deny the fact that bulk part of taxes is shamelessly wasted on their luxuries? They enjoy palatial bungalows, fleets of cars, army of servants, foreign tours and what not, but pay meagre income tax. Despite clear instances of corruption and misuse of powers, no action is taken against them by any agency or court of law. This has discredited the entire system and people are totally disillusioned with the present system of governance and dispensation of justice.
Millions not chargeable to tax under the income tax law are paying 14% income tax at source as prepaid mobile subscribers. Funds unlawfully extorted from their hard earned money are spent on the elites-the daily/travelling allowances and benefits in kind of members of Parliaments annually run in billions. The civil-military-bureaucracy, ministers, state ministers, advisers, senators, MNAs and MPAs together squander billions every year on perks and perquisites alone. Not only this, the elites do not pay a single penny tax on plots and benefits they receive in utter violation of section 13(11) of the Income Tax Ordinance, 2001 ["the Ordinance"], which says:
"Where, in a tax year, property is transferred or services are provided by an employer to an employee, the amount chargeable to tax to the employee under the head "Salary" for that year shall include the fair market value of the property or services determined at the time the property is transferred or the services are provided, as reduced by any payment made by the employee for the property or services".
Section 2(22)(c) of the Ordinance defines words "employment" to include public office holders as well. It says:
"employment" includes:
(a) a directorship or any other office involved in the management of a company;
(b) a position entitling the holder to a fixed or ascertainable remuneration; or
(c) the holding or acting in any public office.
Section 14(b) of the Ordinance defines "services" to include the provision of any facility" and the concept of "fair market" is defined in section 68 as under:
"68. Fair market value.- (1) For the purposes of this Ordinance, the fair market value of any property or rent, asset, service, benefit or perquisite at a particular time shall be the price which the property or rent, asset, service, benefit or perquisite would ordinarily fetch on sale or supply in the open market at that time.
(2) The fair market value of any property or rent, asset, service, benefit or perquisite shall be determined without regard to any restriction on transfer or to the fact that it is not otherwise convertible to cash.
(3) Where the price referred to in sub-section (1) is not ordinarily ascertainable, such price may be determined by the Commissioner".
Section 39(1)(j) of the Ordinance is also attracted which declares the following as income chargeable to tax:
"The fair market value of any benefit, whether convertible to money or not, received in connection with the provision, use or exploitation of property". It is worth mentioning that during the time of PPP government, an ex-Member of Board wrote a letter to the then Finance Minister that massive tax evasion/loss of revenue had occurred due to non-taxation of benefits given to some powerful elements in violation of law. As expected, no action has been taken on his letter as of today. It is sad to note that elites not only thrive on taxpayers' money but also blatantly violate tax provisions. The solution is consolidated pay package for all after deduction of tax instead of tax-free perks and benefits. This will save billions and also bring millions more to national kitty.
The unholy alliance of privileged classes is the main cause of our maladies. The worst thing is that no system of accountability exists that could take them to task. The judiciary and institutions that are supposed to take cognisance and punish them are themselves party to this ugly game of enjoying a number of benefits that are taxable under section 13(11) of the Ordinance but no tax is paid. National Accountability Bureau and Federal Board of Revenue (FBR) are not at all interested in recovering tax from the powerful elites as their top notches are beneficiaries of tax-free benefits as well. Ruling elites tax the weaker sections of society, but are not paying due taxes on their unprecedented and exorbitant perquisites and benefits, which they should not even get. No such precedent exists in any true democracy of the world.
Like his predecessors, the present Chairman FBR on assuming charge in 2013 pledged to tax three million rich people who never filed tax returns. However, he has failed to recover tax even from elites in respect of benefits taxable under section 13(11) of Income Tax Ordinance, 2001. He has, thus failed to convince citizens that FBR means business and nobody is above law. Since the rich and mighty are not taxed, the common people argue as to why they should discharge their tax obligations, especially when the State has failed to protect their lives and property, what to talk of providing basic facilities of education, health, housing and transportation.
(The writers, tax lawyers and partners in law firm, HUZAIMA & IKRAM, are Adjunct Faculty at Lahore University of Management Sciences)