March 16, 2011

Shocking facts about Pakistani income taxpayers

Sad but true. The rich get richer, the poor poorer. And
ironically, the poor get to pay the most.
Shocking revelations keep occurring in the Pakistani press. For example today it has been revealed that out of a population of almost 17 – 18 crore (170 – 180 million) people in Pakistan, only 17 lakhs (1.7 million) are registered income tax payers. Surprising?

But it goes deeper than this. According to the report published in the daily Dawn today, it has been alleged by the FBR (Federal Board of Revenue) that 16 lakhs (1.6 million) of the registered 17 lakhs (1.7 million) people pay only Rs 21000 as annual income tax. Why do they pay so less you may ask? Well that would be because they earn less than Rs 500,000 a year. Now let’s put all of this into context shall we?

Fact 1:
Pakistan’s total population – 170 million to 180 million (approx.)

Fact 2:
Pakistan’s registered income tax payers – 1.7 million

Fact 3:
Pakistan’s income tax payers paying Rs 21000 as annual income tax – 1.6 million

Fact 4:
The highest amount of income tax paid last year (2010) was Rs 50 lakhs (5 million)

In light of these facts, we can make some startling conclusions. To begin with, are only 1.7 million people out of 180 million earning any income in Pakistan? Seriously? Next, why is it that just 0.1 million or 1 lakh people in Pakistan earn more than Rs 500,000 in a year? That is just...mind numbing.

The Rs 50 lakhs, that the highest income earners paid is less than what it costs to buy a Land Cruiser. In fact, it is 1 crore less and there are only 526 people who declared that their tax amounts up to Rs 50 lakhs and who actually paid that amount. Astonishing isn’t it?

What am I supposed to say in front of these facts and figures? Words simply fail to register the magnitude of the disastrous state of our economy. Do I blame Zardari and Nawaz Sharif? Do I blame the government or the army? Or do I blame myself and the Pakistani population for being so selfish and self centred?

The 1.6 million people out of the 1.7 million who pay taxes contributed only Rs 87.662 billion to the national exchequer. These 1.6 million people belong to the lowest bracket of income tax payers. On the other hand, the top bracket of the income tax payers contributed Rs 286.023 billion to the national exchequer. Ironically, the collection of income tax from only the top 1706 taxpayers resulted in such a huge amount of money.

It is no wonder that the world governments, financial institutions, NGOs and what not keep repeating the mantra of Pakistan needs to help itself. The irony is that the Pakistani people don’t want to help themselves; apparently they can help themselves quite easily, and then lead a very good life too but somehow paying taxes has never been the strong point of the Pakistani culture.

These stats and figures paint such a dreary picture of our state of affairs that it has left me shell shocked and unable to fully comprehend the magnitude of the damage that we as a nation have been inflicting on ourselves. Where will we go from here? What will we do next? Has our collective conscience truly deserted us or is this simply a phase?

Sadly, we don’t have any answers to any of the questions that anyone might have. We’re just products of denial. And we’re damn good at it.