ISLAMABAD, Feb 20 (APP):Prime Minister Imran Khan Wednesday said the change of mindset about wealth creation, promotion of tax culture and enhanced tax collection by bringing the elite into tax-net were vital for country’s economic viability.
“Like Darwin’s theory of `Survival of Species’ which calls for adabtability, Pakistan would have to change itself. Around1.7 million income tax-filers could not bear the burden of 210 million of population,” he said while addressing a ceremony held here at the PM Office to give awards to the large tax payers.
The Prime Minister regretted the gnawing chasm between the toiling masses and the elite club, and called for according the highest honour to regular tax payers and filers who were contributing in the country’s development.
He said the government would ensure that the money paid by large taxpayers was not spent on the extravagance of the ruling elite.
The Prime Minister said the government through reforms in tax system and good governance could take the annual revenue collection to Rs 8,000 billion from the current over Rs 4,000 billion.
He noted that those contributing in the country’s development through their taxes should be treated as VIPs (very important people) as these were the people who deserved such a status.
Terming change in the mindset to pay taxes and creation of tax culture as vital for getting out of the financial woes, he warned if mindset was not changed, the country’s situation would become murkier in future.
He said the change of mindset and tax culture would have to be started from the top with Prime Minister, Cabinet Members and the Members of Parliament paying taxes and are made accountable through the tax system.
The Prime Minister referred to the fiscal deficit faced by the country’s gas companies and said even the banks were not ready to extend further loans to these entities, so the price of utility had to be increased. He called for collective contribution to ward off difficulties faced by the common man.
The Prime Minister expressed dismay over the fact only 72,000 people in Pakistan declared their incomes of over Rs 200,000 per month, adding majority of tax collection came through indirect taxes, affecting the common man, which in his view was ‘a great injustice’.
He in this respect also referred to a saying of Hazrat Ali (KAW) that a society could survive with the system of infidelity but not with a system of injustice.
The Prime Minister stressing the need of enhanced tax to GDP ratio in Pakistan to ensure economic development and welfare of downtrodden cited the example of Scandinavian countries where tax to GDP ratio 50% – highest in the world.
He said the taxes collected in the West and Scandinavian countries by the governments from rich and affluent classes were spent on the welfare of poor and low income classes.
The taxpayers in those countries knew it very well that their tax money would be spent judiciously and trickle down to the lower strata of society without ending on the rulers, he added.
The Prime Minister said that the concepts of equitable distribution of wealth among the people and the progressive taxation system in the form of Zakat introduced by the Riasat-e-Madina were being pursued and adopted by the West.
He said it was due to the policies and principles of Riasat-e-Madina that Muslims ruled the world for 700 years.
He recalled that in the 1960s, Pakistan, with high economic growth, was ahead of other countries in the subcontinent, but the policy of nationalization in the 1970s hit the economy and industrialist shied away from investment in the country, and moved to other areas of the world to do their businesses.
The Prime Minister was confident that with the reforms being initiated by the present government coupled with measures towards ease of doing business, the investors were coming and would come to Pakistan.
He also referred to the visit of Saudi Crown Prince Mohammed bin Salman and said they were coming to Pakistan with huge investments due to the climate and investors-friendly policies of the present government.
The Prime Minister also stressed for simplicity and cut in expenditure at higher levels and said he himself had achieved 30% reduction in the expenses of PM House over the last six months, and had asked the ministries to reduce their expenditures by 10 percent.
He regretted that the previous rulers misused the public funds for example by having five PM Camp Offices, paying huge utility bills and getting them treated abroad from tax money. “They could not make hospitals in 30 years of rule where they can be treated”, he remarked.
Explaining the situation in which common people were living in the country, the Prime Minister referred to his recent visit to Holy Family Hospital in Rawalpindi and said he saw three women patients sharing a bed in the hospital. Similarly, four children were also sharing a bed, he added.
He said the present government had decided that no officer or politician would be sent abroad for medical treatment on public funds, adding, he himself twice got treated from Shaukat Khanam Hospital.
“Leaders lead with examples”, the Prime Minister said and added he collected money for Shaukat Khanam Hospital and Namal University through fund-raising events at home and abroad.
The Prime Minister said people of Pakistan contributed Rs 6 billion per annum to Shaukat Khanam Hospital for treatment of the poor people, adding, Namal University, where 90% of students were poor, was also being run with contributions from people.
Earlier, the Prime Minister also distributed awards among top nine taxpayers in three categories including Companies: Zahid Mir (OGDCL), Farooq Khan (UBL), Zahid Nazeer Bhatti (Government Holdings); Association of Persons: Mohabbat Khan (ZKB), Waseem Afzal (ZKB), Asif Majeed (Ad Tel); and Individuals: Mohtarma Saima Shahbaz Malik, Muhammad Yasin Malik and Ahmadullah.
Minister for Finance Asad Unmar while speaking on the occasion said reforms in the Federal Board of Revenue (FBR) were aimed at enhancing the tax to GDP ratio; giving ease to tax payers through simplification of returns and other forms; ensuring minimum interaction between the taxpayer and tax collection by using technology; integration of data of tax payers etc.
He said those paying taxes would be given ease and respect, while ensuring that tax evaders did not hide, adding, when the big fish would be caught, the small ones would have fear of tax evasion.
The finance minister said it was the government’s duty to protect the rights of people through transparent tax system and collection. “It is right of people that the money they pay as taxes is spent on their welfare”, he remarked.
Minister of State for Revenue Hamad Azhar highlighted the measures taken by the present government to reform the tax system over the last six months and said the separation of tax administration and tax policy in FBR was one of the major measures.
He referred to a report of the World Bank and said Pakistan stood at 175 out of 200 countries in terms of most complicated tax system, adding, the country was losing Rs 800 billion to Rs 1000 billion revenue due to flaws in the tax system.
Hamad Azhar, however, added that a comprehensive reforms process was being undertaken in the tax system which would help enhance the country’s revenue as per its potential.