Development of Tax Culture--Need of Legislation

DEVELOPMENT OF TAX CULTURE-- DEVELOPMENT OF TAX CULTURE-- NEED OF LEGISLATION By Muhammad Arshad Naseem Khan, Tax Advisor, Karachi It is very important before commenting, advocating and opine on Tax Culture', we must understand this said term. The National exchequer (Federal Board of Revenue, Ministry of Finance, Ministry of Commerce & Trade in particular and other Government Machinery including Legislatures) , inadvertently and erroneously not only misleading themselves but misrepresenting , miscommunication , misquoting and mispropagating before the nation by emphasizing and concentrating only in saying. "DEVELOP THE TAX CULTURE IN PAKISTAN THROUGH PAYMENT OF YOUR DUE TAXES AND FULFILLMENT OF YOUR FINANCIAL AND TAXATION OBLIGATIONS AS ENVISAGED UNDER THE VARIOUS PROVISIONS CONTAINED UNDER DIFFERENT FISCAL LAW ENFORCED FOR THE TIME BEING IN PAKISTAN" From the above one can easily drew an 'inference' that this (tax culture) is deemed to be a One way traffic, having said that one can explain as just continue to pay your due taxes and follow all the aforeiaid fiscal laws and the National exchequer is only and only available here for - MAKING LAWS, IMPLEMENTATION THEREOF, COLLECTION OF TAXES AND RECOVERY OF ADDITIONAL TAXES, PENALTIES, SURCHARGES, ETC. Hence, it connotes that A compulsory contribution (by the Taxpayer) to state revenue, levied by the government on personal income and business profits or added to the cost of some goods, services, and transactions is being in practice in one way or the other, But, we have NOT yet achieved or touched the boundaries of a refined understanding or appreciation of this (tax culture). Now, question arises, against whom these laws, so made or legislated, off course, only followed by law-abiding citizens' (here in this case the Taxpayers) and the implementation of any penal proceedings (surcharge, additional taxes, penalties, etc.) deemed to be from the "EXISTING TAXPAYERS" , who are paying their taxes and fulfilling the fiscal and taxation obligations to their best of knowledge and belief. Here, I would avoid purposely the issue concerning 'taxpayers not paying their due taxes' properly and correctly, why! Simply because, there may be plenty of reasons like, * Some Technical ground'; * The basis of Financial Statements (may be accepted or may be selected fur scrutiny by the Exchequer); * Committing some errors or mistakes (Not deliberate or wilful); and so on so forth Therefore, these aforesaid issues have nothing to do with my topic 'tax culture' and in my considered opinion these aforementioned points does not fall under the head "EVASION OF TAXES" as well. Now, coming back to The topic i.e. tax culture I believe that it's a Two way traffic', like * Why you study (any king)? to get yourself ready/prepared to appear in respective Exam. and then wait for the Result. * Being an employee/labour, you work and then at the end of certain time period, you get salary/wage. There are so many examples from our daily routine life that acknowledge a concept to Two way traffic. You are encouraged, appreciated and supported by your Parents, school Teachers, Immediate bosses, owners (where you work) respectively through their help in so many ways to get better results in both the aforesaid scenario. In both the aforesaid situations Any one not a student or does not attend the school or never sees a school cannot get through the respective Exam. and above all cannot be offered any short-cut for such results, or NON-STUDENT are NOT at PAR with Student; A person deliberately keep himself/herself away from work or a habitual absentee, cannot enjoy the salary/wage as enjoyed by a regular and punctual employee/labour or cannot be taken at par with them However, in Taxation World of Pakistan we had never witnessed any 'Scheme' or `Policy' or 'Support' from the National Exchequer, which has ever encouraged or appreciated or helped the "TAXPAYERS". One may come up with an argument that we had Self-Assessment Schemes and now universal self assessment schemes for taxpayers, oh no these schemes were nothing to do with tax culture. Again, simply a one way traffic, like pay more than the last year so 5% chances remain to be selected for audit, etc. Now, I would touch a very sensitive point and that is we have witnessed and observed, too many schemes that had made for NON-TAXPAYERS and here, permit me to say for TAX EVADERS, like Get your black money or undeclared wealth white by paying such and such percentage and there will be no penalty proceeding Or any adverse inference Did such schemes or policies ever encourage any existing taxpayers, who are contributing within their capacity (more or less not the principal point here) towards the prosperity, development and success of our beloved Pakistan. Never, in my experience, there ever any scheme or policy, which has offered the "existing taxpayers" any reduction in their tax rates (applicable at that time) or any other benefit of such kind. This is the high time now, if we really wish to establish and develop a Tax Culture' in true sense then the Legislatures must legislate in a manner not only to protect but to encourage via certain mechanism, the existing taxpayers. How can we achieve such protection and encouragement? Very simple, the National Exchequer must see issue with their sincere and sensitive heart. In my opinion there are several ways to do to some of these are * Taxpayers must get respect as against non-taxpayers in our society through proper and relevant legislation; * Taxpayers must get priority in privileged manner over the non-taxpayers in having new UTILITY connections; * Taxpayers must get on priority basis excellent facilities in education and health sector; * Taxpayers must be given chance to get on priority and urgent basis facilities like travelling through Air, Sea, Road and Railway on discounted fare; * There may be some Utility chain stores, which can offer the Taxpayers items of Basic Necessities of Life at a reduced or subsidized rate; * Most importantly the taxpayers must be entertained by the law-enforcing agencies, when they are in trouble, such as * Road accident cases, * Theft cases, Car/Mobile snatching cases, and * Above all, Filing of `F.I.R's or any other issues of emergent nature; * TAXPAYERS paying their taxes since last 30 years, 25 years, 20 year, 15 years, shall get a reduction in their current tax liability by 15%, 12%, 9%, 6% respectively. And so on so forth. I am only confident but very optimistic that the day the National exchequer provided the afore discussed Legislation through best way of implementation, we will have more Revenue collection from these taxpayers besides, very positive and encouraging sign of appreciation for the non-taxpayers or tax evaders, these will get attracted and they will be in the "Q" with TAXPAYERS. Last but not the least, the moment we will achieve this above Legislation with a very sincere and effective implementation, only then, we can say that we have a "TAX CULTURE' in our beloved Pakistan oh ! yeh , there is always a room for any improvement ..