Pakistan is rampant with tax evaders and they are able to evade tax because tax collecting authority, FBR employees  are all partners in this crime. The citizens of Pakistan have been living tax free for many decades. Currently FBR collects taxes from only 0.5% of registered tax payers. The Government of Pakistan collects indirect taxes by taxing all house hold items like fuel, food grocery while they are unable to catch the big fish in their tax net.

This tax free culture has helped, not only the FBR employees become filthy rich, it has also helped the tax evading businesses and persons to become rich, which has resulted in expansion of cities and businesses, but with this expansion also comes many problems that are associated with unplanned sudden expansions, like heavy traffic, pollution, water shortages, etc. For example in Peshawar the 22 km commute, from one end of the city to the other end, would take anywhere from four to five hours during office hours. Now the Government of KP wants to improve the city’s infrastructure but they are finding it difficult to acquire free land to build new infrastructures as all available land is in the possession of these tax evaders.

Land being the safest investment (till now) in Pakistan all the tax evaders invested in land. They have their residence and businesses for many years and are not ready to vacate or sell their property at low rates. Now this is where the decades of tax evasion can become useful to the current Government of KP. Using the example of ‘shop owners of Badami Bagh’ in Lahore, whose property was bought by the Punjab Government for low rates for construction of the Metro Bus road.

This was possible because these shop owners had avoiding paying any property tax, for decades, by undervaluing their properties in official documents, to avoid high stamp duty and other taxes. Since the Government uses the property value on record, to get the average property rate for the area, these shop owners had to sell their land at 1/4th of the actual value and there were no protests, as any protest would be tantamount to an admission of tax evasion and could result in arrest and prosecution of the shop owner.

If such actions are taken by the Government of KP to modernize the infrastructure of the main cities, it would not only help develop the city, as the new infrastructure would improve the standard of living and economic activities in the city. It would also reduce tax evasion in KP, as all citizens would want to avoid the situation of selling their expensive property at very low rates to the Government and would therefore declare the full value of their property and pay the full amount of tax in future.


Peshawar, February 15.