When it comes to public life, it is difficult to differentiate between a businessman who honestly believes in paying all his tax liabilities and the other who enjoys all facilities of life in this country but does not pay any tax. There is no specific protocol for the honest taxpayers and they are often looked with suspicions as if they are criminals of this nation. The element of respect for the taxpayers is missing and this should be an area of concern for the government authorities. The taxpayers need to be honoured and respected at airports; police stations and every other place that mattes. However, not all the non-filers are criminals either. There are millions of small and medium level businessmen, traders and manufacturers who want to pay tax, but they are afraid of coming into tax net due to some black sheep within the tax hierarchy. Corruption does exist in every government department and corruption cannot be controlled by orders or requests, but with implementation of a foolproof mechanism.
The government has recently introduced the voluntary tax compliance scheme for registration of non-filers as its last ditch effort to broaden the tax net and improve revenue collection in the country. It is important to note that business activities always find their ways to go ahead despite hurdles and the government decision to give tax amnesty to non-filers is the best possible option in the given situation. The voluntary tax compliance scheme will leave a positive impact not on the business and economy, but will also enhance revenue collection at the government level. The scheme will also pave the way for documentation of the informal economy by allowing non-filers to regularize their undeclared assets up to Rs 50 million against the payment of just one percent tax. Other countries also announce tax amnesty schemes not only to increase tax revenues, but also to stop capital flight. The government should also take measures to stop harassment of the business community by several federal and provincial authorities.
According to international agencies, tax rules and regulations are frequently changed in Pakistan which can also be a reason for tax evasion as complicated tax system discourages potential taxpayers to come into the tax net. Businessmen need a congenial environment, free of coarsen and exploitation, for business activities and when they are pressured, the businesses of money laundering and smuggling flourish. A working coordination between businessmen and government officials is necessary for the payment of taxes. The tax-to-GDP ratio in Pakistan is the lowest in the region and the voluntary tax compliance scheme is the right step in the right direction in this situation.
