The progress of a country's revenue generation directly depends on the growth of its economy and the fairness of its tax collectors to deliver. However, at the broadest and lowest level of this enforcement lie a mass of people with different ideas, idiosyncrasies, historical traditions and daily experiences. This diversity is intertwined at the very top with governance manifested by its politicians, establishment, enforcement and intellectuals. Consequently, the tax culture of a country will always take the colour of its top tier. South Asia, in which Pakistan is no exception, has a very healthy and proud tradition of philanthropy and charity. The people are not averse to the concept of giving and donating as long as they know it goes to the right hands. In a modelling we carried out along with local tax officials of Gujranwala, the charity paid by small business owners was thrice the taxes paid to the government. Herein emerges a paradox. Pakistan is one of the world's highest charities paying country per capita income, yet it has one of the lowest taxes to GDP ratios. According to Dr. Birger Nerre of the University of Hamburg, the topic of 'Tax Culture' appears precisely at the intersection of the disciplines of economics, sociology and history and this is precisely where the disconnect in Pakistan lies. Consumer based taxes depend on the ability of the majority at the bottom of the barrel to consume. If they consume, the supply chain automatically delivers more revenue. In order to boost production and its consumption, the most viable alternative is to make others consume through exports. If both domestic economy and exports do not propel consumption, first because of a prohibitive consumer price index and second due to inability, the revenue shrinks. In circumstances such as these, a bulwark approach in recession is surely a recipe for hyperinflation, poverty and a black hole in the economy. Therefore, once an establishment that lacks good governance, accountability, impeccable character, and an even-handed approach in enforcement, enforces more and higher taxes at the consumer end, it is another disaster in making. Sales Tax is the oldest tax of human civilisation. Its basic premise was and remains to collect a levy at every stage of transaction. Ultimately the entire burden passes on to the last buyer. This consumption forces private cash holding into circulation triggering reflation of economy, raising Consumer Price Index (CPI) and expanding the Gross Domestic Product (GDP). In most countries of the world, this paradigm of consumerism as an end-means relationship has not changed. It also allows the effective tax rates to be much higher than the declared rate: an aspect hidden from taxpayers. However in growing and robust economies like USA, this indirect form of taxation apart from mortgaging is the mainstay of revenue. Being domestically competitive and productive with a consumer society based on the ethos of its founding fathers, it has so far precluded the need to shift to a form of Value Addition. The US paradigm remains consumption led growth. America must produce so that the rest of the world consumes. However in countries that depend less on domestic consumption and more on exports to keep the consumption cycle positive, the Sales Tax has been reformed to a more scientific method of value addition. The purpose is not to levy additional consumption taxes on citizens but rather to determine incomes for direct taxation. France began the experimentation and was followed by EU, Singapore and the rest. The most noticeable commonality in all these countries is the prohibitive CPI in terms of Pakistani exchange rates. In tight economies plagued by an endemically corrupt political culture and fiscal manipulation, this form of taxation becomes regressive and a precursor to hyperinflation. As the CPI becomes pr-ohibitive, broad steep pockets of poverty appear. This is exactly the havoc being played in Pakistan through borrowed, least understood, and awfully implemented consumer based taxation systems. The exercise to convert GST to a productive and acceptable social tool began in full earnest in 1999 under Musharraf. The Economics Affair Division was extremely zealous to fulfil its obligations to IMF sponsored Structural Adjustment Programme (SAP) and bring a vast sector of the undocumented, informal, comprador and black economy still going strong into the tax net (Pakistan was into its 10th Year of Nuclear Sanctions). VAT was projected as a modern methodology to document the additional transactional taxes at every stage with GST identification. Theoretically, once the total VAT paid by any single entity in a year is determined, the ascertainment of profits is a simple calculation. So if an entity paid Rs 15 in a year, its profits are Rs 85. This is the point where the Income Tax Department was to step in and tally the IT Returns of that entity with the income reflected in GST. Both tax evaders and cheats were to be netted and Income Tax broadened. During lengthy deliberations in CBR, Ministry of Finance and GHQ, we repeatedly emphasised that if the purpose of VAT was indeed broadening the tax base, then even a levy of one percent rather than 15 percent was sufficient to broaden the tax base through the Income Tax Department and use of computers and sale machines. Any VAT remitted as one percent meant 99 percent profit. During my repeated interactions with the Ministry of Finance, CBR and traders, I asserted that the purpose of VAT should not be to raise taxes but to broaden the tax net manifold through the Income Tax Department. Perhaps this is where departmental corporatism set in. Sales Tax Department of late had become the domain of custom officials who had also absorbed some officials of the Excise Department. Moreover, customs, Sales Tax and Income Tax zones had different geographical boundaries meaning organisational reforms within CBR. It was also a slur on the GST Department to act as a feeder to the Income Tax Department. Even if all this was accomplished, technical expertise was imperative to ensure success. Just to prove this point, Pakistan Revenue Automation Limited (PRAL) was asked to set up a model CBR office in Westridge and document information coming through the unimaginative tax survey. We set up a simple EXCEL programme to determine the profit levels of GST Returns/Invoices. The simulation gave surprising feedbacks on the tax evasion of known entities. This simulation was run by me during a Cabinet meeting held in August 2000 in GHQ, showing the Income Tax rising threefold. There were valuable contributions made by member Income Tax Mr Mansoor and Economic Advisor Dr Ashfaq Ahmad, both working many extra hours with us to streamline an effective methodology. But then something happened. All our efforts came to nothing at all. The decision makers decided to revert to a consumptive tax of 15 to 18 percent raising it to 28 percent in some cases. PRAL was never allowed to display its expertise. What we finally got was a regressive consumptive levy least amenable to documentation or economic growth. One of the most destructive effects of this levy was that either the small businesses particularly in the manufacturing sector closed or in quest for avoiding multiple taxations surrendered to larger businesses. The age of cartels had arrived. As for rest of the world, it still looks for a perfect VAT model. Had Pakistan been so good at it, tax experts from world over would have swarmed here. Now history is being repeated once again. The inputs of our intellectuals are conspicuously lacking. Once again the progeny of the old guard will sit down to reinvent a wheel and once again the people of Pakistan will suffer. Dr Farrukh Saleem was prophetic when he coined the term in 2000: "sucking blood from stones." The writer is a retired Brigadier and a Political Economist. Email: