Wednesday, September 26, 2012
Sunday, September 11, 2011
Mismanaging the taxes and revenues
While travelling to Faisalabad a few days ago I felt really irritated by the number of toll plazas which one happens to come across on the way. For what it seemed like every 75 kilometers one would have to stop at a toll plaza and pay some odd amount randomly arrived at (I assume) by some nincompoop who has no idea of what the bigger picture looks like in the revenue and tax administration of this country.
While calling these administrators absolute fools I feel even more belittled for if they are indeed such idiots then what does that make us the people of Pakistan who are following their mindless rules without protesting or giving it another thought. The rage that I feel is so much sometimes at being insulted and being treated as a second grade citizen in my own country that I have a good mind to go and see a doctor for this to have my physical condition checked up. I feel that perhaps such rage is really not what comes out of a little insult but could be the doing of a physical condition.
However if you look at what all is wrong with the country today you may realise that perhaps the physical condition part is not so much to be blamed and that the mental condition of the people running the state may be.
Over a period of time what has happened is that new rules have been made without regard to old ones and so we have a totally mismatch of patches in place which are at time self contradictory. One can only shudder at the direction or the lack of it that these contradictory rules and regulations can give us.
Despite trying not to I ended up thinking of the toll being received by the state for usage of road. The questions that arose were obviously as follow :
What revenue is collected on these toll plazas ?
How much of it is spent on the repair of these roads because that is why it was levied ?
Is there a shortfall or a surplus in this amount at the end of the year ?
Does anyone look at the shortfall or surplus and report it somewhere ?
Is the shortfall if any accounted for in the award of the next years contract to the contractor ?
Does the toll revenue collected contribute a significant amount or is it just a nuisance that the public is exposed to ?
Since long the international economists have been pleading with our tax collectors to lessen the burden of indirect taxes on the common man but to no avail. If we look at the latest Economic Survey of Pakistan which is available on the net the figures speak for themselves.
Direct taxes are Rs 430 billion out of a total of Rs 1156 billion (July- March 2011). The highest growth which took place was in sales tax. Again an indirect tax which gets passed on to the consumer as an increase in prices.
When some years ago figures had been floated by MR Moeen Qureshi about the abysmal performance of the tax collectors we thought change was imminent. But not so in the land of the pure. Liberty market which used to pay a pittance by way of income tax probably still pays about the same. Figures have not been shared if there is a significant increase.
The point that drives me crazy is that break down of targets is like management 101 and yet our people fail at it. Why cant the assign targets to territories and then move on from there. These targets can be reviewed with a rate of inflation and increase each year. Forensic investigation like looking into the kind of foreign travel of the sale of luxury items like expensive watches and mobiles plus construction of fantastic villas by the elite are things which would come on later. But lets first do management 101. Have tax targets for each territory and then see why they are not being achieved.
There are indeed some good things being done as well. But then for people like me who have waited since the 80s for the system to change and improve its too little too late.
UPDATE: As per the new information given by FBR the total revenue collected was Rs 3112 billion for 2015-16 out of which Rs 1,191.6 was direct taxes. Unfortunately the definition of direct taxes has been "tweaked" hence now figures are almost meaningless !
If however you read tFBR Yearbook2015-16 you will find on page 10 that WHT has been included in income tax which is construed as direct tax...that's debatable but not totally kosher.
So with holding tax or WHT is over Rs 800 billion out of the Rs 1190 billion of income tax. That leaves Rs 390 billion out of which over Rs 300 billion is advance tax.
The actual taxes filed with returns are Rs 38 billion rest are either arrears of on demand as they call it.
Really a very slippery kind of a situation. I hope to find some time in the near future to shatter their web to smithereens.
While calling these administrators absolute fools I feel even more belittled for if they are indeed such idiots then what does that make us the people of Pakistan who are following their mindless rules without protesting or giving it another thought. The rage that I feel is so much sometimes at being insulted and being treated as a second grade citizen in my own country that I have a good mind to go and see a doctor for this to have my physical condition checked up. I feel that perhaps such rage is really not what comes out of a little insult but could be the doing of a physical condition.
However if you look at what all is wrong with the country today you may realise that perhaps the physical condition part is not so much to be blamed and that the mental condition of the people running the state may be.
Over a period of time what has happened is that new rules have been made without regard to old ones and so we have a totally mismatch of patches in place which are at time self contradictory. One can only shudder at the direction or the lack of it that these contradictory rules and regulations can give us.
Despite trying not to I ended up thinking of the toll being received by the state for usage of road. The questions that arose were obviously as follow :
What revenue is collected on these toll plazas ?
How much of it is spent on the repair of these roads because that is why it was levied ?
Is there a shortfall or a surplus in this amount at the end of the year ?
Does anyone look at the shortfall or surplus and report it somewhere ?
Is the shortfall if any accounted for in the award of the next years contract to the contractor ?
Does the toll revenue collected contribute a significant amount or is it just a nuisance that the public is exposed to ?
Since long the international economists have been pleading with our tax collectors to lessen the burden of indirect taxes on the common man but to no avail. If we look at the latest Economic Survey of Pakistan which is available on the net the figures speak for themselves.
Direct taxes are Rs 430 billion out of a total of Rs 1156 billion (July- March 2011). The highest growth which took place was in sales tax. Again an indirect tax which gets passed on to the consumer as an increase in prices.
When some years ago figures had been floated by MR Moeen Qureshi about the abysmal performance of the tax collectors we thought change was imminent. But not so in the land of the pure. Liberty market which used to pay a pittance by way of income tax probably still pays about the same. Figures have not been shared if there is a significant increase.
The point that drives me crazy is that break down of targets is like management 101 and yet our people fail at it. Why cant the assign targets to territories and then move on from there. These targets can be reviewed with a rate of inflation and increase each year. Forensic investigation like looking into the kind of foreign travel of the sale of luxury items like expensive watches and mobiles plus construction of fantastic villas by the elite are things which would come on later. But lets first do management 101. Have tax targets for each territory and then see why they are not being achieved.
There are indeed some good things being done as well. But then for people like me who have waited since the 80s for the system to change and improve its too little too late.
UPDATE: As per the new information given by FBR the total revenue collected was Rs 3112 billion for 2015-16 out of which Rs 1,191.6 was direct taxes. Unfortunately the definition of direct taxes has been "tweaked" hence now figures are almost meaningless !
If however you read tFBR Yearbook2015-16 you will find on page 10 that WHT has been included in income tax which is construed as direct tax...that's debatable but not totally kosher.
So with holding tax or WHT is over Rs 800 billion out of the Rs 1190 billion of income tax. That leaves Rs 390 billion out of which over Rs 300 billion is advance tax.
The actual taxes filed with returns are Rs 38 billion rest are either arrears of on demand as they call it.
Really a very slippery kind of a situation. I hope to find some time in the near future to shatter their web to smithereens.
Thursday, March 24, 2011
LETS NOT BE RABBITS
One thing we as a nation have common with rabbits apart from our propensity to contribute significantly in the population explosion of the planet is the our desire to jump start everything. We want to jump start the economy, the democracy, the infrastructure improvement and our sports performance in the world arena.
I too have been guilty of such thinking in the past. However like many fellow countrymen I have also started having second thoughts. The idea that in the real life there are really no short cuts and that this would also apply to the history and the learning curve of a nation has finally germinated in my mind.
I too have been guilty of such thinking in the past. However like many fellow countrymen I have also started having second thoughts. The idea that in the real life there are really no short cuts and that this would also apply to the history and the learning curve of a nation has finally germinated in my mind.
Friday, September 10, 2010
Pakistan... the rudderless ship!
When Mush was around and we had the earth quake in Kashmir at least
there was a plan and people had some faith. Now people have no faith so
no one is donating and there is no (pardon my french) bloody plan. How
many C 130 loads has Karachi ...donated this time ? There is no faith in the state machinery.That
is also the... reason why even Shahbaz Sharif can't get much money as
donations because the public is saying that Shabaz may be honest but the
machinery through which he will roll out his plan is mostly corrupt.Corruption
is not just pocketing the money directly. It is also trying to sell
left over stocks of medicines etc at exorbitant rates. It is also
upsetting the priorities of the Govt. by confusing the entire situation .
There is no bench mark of what is the basic that we have to provide
first. For example how many tents did we need and how many have been
provided. For KP and Punjab it is too late to talk about tents. Now
people are trying to return. Now we need to bench mark number of houses lost. For people who have lost brick and concrete houses sandwich panel houses like the ones built in Kashmir should be constructed. For ones who have lost mud houses wood beams or iron girders should be provided.
There is no direction from the state as far as insurance claims are concerned. Is force major e being applied to stocks insured ? Is the state leaning on insurance companies to reconsider ?
Compensation for markets and shops lost should be based on the size of the shop and the type of business. We don't see anything like this happening here.
It is difficult to gauge the extent of losses in a culture where very few pay taxes. But then some unorthodox methods have to be used and more money has to be pumped in to the economy. Or else thousands will be stuck in the vicious circle of poverty.
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