The FBR in Pakistan has finally become active. After managing to collect tax from less than 0.5 percent of the population of Pakistan for last 50 years, the new managers in FBR are looking for new ways to collect tax. One suggestion that I would like to make is that they can start with the most obvious. They can start the tax collection from commercial and residential plazas and building owners. Since Pakistan has many commercial and residential plazas, mostly with a single owner, that have a regular stream of income in the form of rent collected every month. The plaza owners also collect refundable security and other costs of electricity and guards from the renters, giving them a huge amount as savings that also pay them extra income, as most owners of plaza deposit this ‘security deposit’ amount in saving certificates at high interest rates. These plaza owners recover their original cost in the first few years and then only collect profit. But I am sure they don’t pay any taxes!

Since these plaza owners do not have to worry about losing rent or having other financial insecurities associated with their business as compared to other businesses like industries, therefore they should be taxed at a higher rate than other businesses, and the tax percentage can be increased each year to be up to 40 percent per month.

Also these plaza owners collect huge amounts as ‘security’ and this amount should be properly highlighted and tax collected on this amount as well, since keeping such huge savings is not only un-Islamic, this amount is also a loss for the renter, as he/she cannot use this amount for any business, which can generate jobs and more taxes.

To ensure that such stream of revenue are highlighted for tax purposes, the FBR can pass a special law that ensures that each owner of apartment buildings has to receive their monthly rent and yearly security via bank deposits, and anyone found to be hiding these should be punished. Also the renters of the shops/homes in these plazas can be asked to fill out tax forms every year that can be used by FBR to figure out the rent collected by plaza owners.


Malaysia, April 22.