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Illogical Withholding Tax
04-20-2010, 03:49 PM
Post: #16
Good analytical review of taxation structure.
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04-20-2010, 07:00 PM
Post: #17
Dear Punjabi

Thank you for sharing your thoughts.

In fact we cannot simply blame the governments that are piercing the poor from ages since most of such government (non-army one) are brought in by the same poor who are a major component of 170 million population. I just recall that present President perhaps got the highest votes in the history of Pakistan, from the representatives of those poor. I literally have seen people distributing sweets, dancing and singing in the streets whenever some changed (already well proven) worst dishonest and corrupt face comes forward. This is what we are and what the majority known as “poor” is.

I believe population gets the same governance exactly what it requires and what it in fact DESERVES. This is the rule of nature!! We have to live with it.

It had been and will always be difficult to curb out the in-efficient and dishonest governmental structure since we don’t have ability and appetite to find our own pitfalls and correct our own-selves that would be a starting point to make a change.

Further, as far as indirect taxation is concerned, whatever it is felt to be or believed to be, it exists across the globe at most of the revenue structures even in the most advanced countries. For a moment, I tend to say that who wishes to express his liking for any sort of taxes at all? I guess no one. So, in fact no one wishes to pay taxes at any corner of the world and ESPECIALLY at the locations where dishonesty is a common feature of life. I mean locations like Pakistan. Our fellow has rightly pointed a scarce proportion that is a taxpayer out of 170 million.

Here issue is to manage the situation, the more it is aggravated the more likelihood would be of increase in disliked taxes. Believe you me we have the most aggravated situation when taxation and recovery comes into question. Stealth taxes have to be levied on thieves and it would be a bit unjustified conclusion if we say thieves are only those who are charged with Governance powers. There is a long list of thieves and so many can be found in those poor as well. Certainly I am not talking about the people who are really handicapped in financial perspective. All the agricultural sector (80% of our economy) is not paying taxes, the whole stock market is exempt and is supposed to be exempted for two further years (like it was done in 2008) if Baray Sahib ke Khidmat time par ho gai; industrial sectors keep on crying for power shortage, wrong policies, high labor and input cost, loss of exports and profits and keep on declaring losses and claiming refunds against WHT that they some how have paid. People became billionaires overnight by trading properties during a phase of 3-4 latest years (before the current melt down), there were no rules and procedures to bring such transactions within tax net. The whole black money is converted to white by laundering it through a foreign visit and remitting again in the shape of foreign remittances that are neither TAXABLE nor QUESTIONABLE since we need foreign currency reserves and foreign remittances by all means. There are so many issues which most of us are aware about without having a real means of correction. The problems created by thieves create reasons to burden the ones who are really not supposed to do it. This happens universally and even in the laws of God. Unfortunately, there appears no sound and logical way out given the level of education and understanding of basic issues by the majority termed as poor.

Yet, we have witnessed many positive things due to involvement of professional people, although they were very few.

Since 80s, the proportion of indirect taxes is reducing and this is the only positive thing we have when WHT is discussed. Direct taxation rates for banking companies and private companies (previously 58% and 45%) have been over the period reduced to 35% and brought in par with listed sector. Small company concept was introduced with quite reduced tax rate to encourage SME sector. Strict and corrupt income / return assessment system has been replaced by a universal assessment system where the return filed is deemed to be assessed. There is in place a very definitive system for selection of audit cases; and now such audits were also supposed to be outsourced to professional people (although corrupt machinery is doing all the things to create obstacles), structure of offices of FBR has been changed, LTUs and MTUs were established and so many other reforms have been made.

There is always a war between good and bad; and such war exists even in our brains. I wish we could be among the most honest nations of the world, yet it is very difficult keeping in view the stuff we have.

For change of a system, we need change in individuals and for a change in individuals we need change in “myself”. Here lies the difficulty, since correcting “myself” is the most hard nut to be broken down; and the resultant pain, anxiety, inconvenience and burdens have to be shared by others as well since we are in a common society and we cannot make out discriminating and differentiating rules for at least “commoners”.

Indirect taxes are a live reality and unless there is a real reduction in thieves would not appear likely to be reduced to some demonstrable level. This is a fact though is a bit sour.


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04-20-2010, 07:17 PM
Post: #18
I quote following portion of the post of a fellow from UK

……………Lets say a poor man spends 100PKR a month on his prepaid mobile phone card. Most shops do not offer a tax receipt for him to keep in order for him to be able to use it on his tax return. How is he supposed to prove what he has spent on his prepaid cards……..


The mobile recharge card is itself a proof to claim/adjust the tax. No shopkeeper will provide any one a tax receipt against sales of a mobile balance recharge card.

Further, only upon one telephone call at the HELPLINE of the mobile phone service which you utilize, they will send you a tax deduction/withheld certificate in your name (if SIM is in your name) within maximum of 48 hours through registered post or courier service, that will include the entire amount of income tax on all the cards you purchased and used during a given financial year. This certificate is a sufficient proof under law to claim/adjust the income tax paid on telephone cards.

This is for information.

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