Dr Sania Nazir Chaudhry Finances are basic to the functioning of any country, as the national exchequer bears the cost of governments running expenses, as well as the development works, to provide basic infrastructure and facilities to the entire nation. It is the duty of every citizen to ensure that he pays all taxes owed by him to the tax collecting authorities. The revenue administration ensures that an efficient system is in place for equitable taxation and revenue collection. Their advice to the legislature guides the tax policies and laws. The issues faced by the revenue collecting authorities are diverse. According to a report published in a local newspaper on September 10, 2011, Chairman Federal Board of Revenue (FBR) accepted full responsibility for presenting wrong revenue collection figures and transferred 30 top officials. Obviously, these figures were generated at the grass root level taxation offices and forwarded through the entire hierarchy of senior tax officers to reach the Chairman. It brings to mind three important questions with regard to incorrect figures. Was this a deliberate tampering of figures or a once-off typing error? If it was a mistake then, perhaps, the action of transferring 30 top FBR officers was too severe. It takes a lifetimes education, training, experience and much more to reach this level in a career. Besides training officers to attain this level of seniority costs the state precious time and money. The second question is: Is this the first time incorrect figures were presented or the first time this reality was established? Are all other figures about previous taxes collected under different heads, refunds issued and due in specific years, tax losses forwarded, and the numbers of taxpayers projected correct? Tax policy or laws and tax administration are the two components, which contribute to efficient revenue collection. The policies are based on statistics. It is essential that all information emanates from authentic facts and figures. Currently, it is hard to distinguish which published figures are genuine and reliable. However, the nations policies are prepared based on the available statistics. Pakistan is a country with an enormous population of over 170 million, and with a minute tax base of only 3.2 million registered taxpayers. The major component of this tax base is the salaried class. In 2010, only 1.9 million taxpayers filed returns. Several restructurings of the revenue collecting setup have taken place till now and are a regular feature of this organisation. But changing names of departments or designations is a futile exercise, if the process of functioning of the department is not appropriately altered. The organisations culture needs to change to be able to reflect in the tax collection figures. Every restructuring and reengineering effort costs several millions, but it does not result in the intended increase in the revenue collection. The failure to learn from mistakes and to make the same mistakes repeatedly is a characteristic of our public sector organisations. The discipline of organisational development ensures proper implementation of such restructuring programmes, minimises the risk of failure and maximises the benefits, but there is no political will to improve the current state of governance. The salaried class is stuck with paying taxes because it is deducted at source and they do not have a choice. Ask a salaried taxpayer how he feels about his tax deductions? Bar a few exceptions, given the choice he would not want to pay any taxes. The reason is that a taxpayer pays taxes to get good governance, but in Pakistan taxes only fill up the kitties of the corrupt running this country, who themselves pay negligible or no taxes. Additionally, infrastructure and development expenditure is minimal. Debt repayments and defence expenditures eat away the entire countrys budget. All that the public is left with is electricity and gas loadshedding, rise in power and fuel prices, inflation, food and housing shortage, poor health and education facilities, unemployment, deteriorating law and order situation, and bomb blasts and suicide attacks. The nation suffers from a viscous circle syndrome where the public would rather not pay taxes, and poor tax collection and pilferages will not allow adequate spending on public infrastructure and development to improve the existing situation. The tax base needs to be healthy with more industrialists, traders and high salary earners featuring in, rather than low income traders and salary earners. The list of taxes in Pakistan is huge and trespasses the double taxation concept. Progressive taxation allows for taxing the rich to promote the recirculation of wealth. But in our context, the tax burden is heavy on the salaried middle class letting the wealthy elite to evade taxes to the detriment of the nation. This has resulted in the accumulation of wealth in the hands of a few citizens. If appropriate measures are taken, it is not impossible to target the category that enjoys the ultimate luxuries of life without paying their due share of taxes. Whether we like it or not, taxes must be collected and spent on the public. Any tax policy or law will fail unless complemented by an efficient and effective tax administration. This is where the key to revenue collection lies. The revenue departments need to evaluate and rethink their strategies based on valid facts and figures. Where there is a will, there is a way. There are examples of many countries who have dramatically improved their revenue collection services, so it is not an impossible venture. Unfortunately, each time a revenue shortfall is to be addressed, the immediate response is to increase or levy another tax or surcharge, sometimes at the discretion of political leaders and sometimes on the advice of the Finance Ministry. This only taxes people who are in the tax net, while those who have succeeded to evade and avoid taxation continue to do so. In the post-IMF scenario, I anticipate that the tax burden on those already taxed will further increase unless the revenue collection authorities resolve to expand the tax net on a war footing. The writer is an ex-assistant commissioner of Income Tax, a practising IT/change management consultant and a public sector management analyst. Email: drsaniachaudhry@gmail.com