ISLAMABAD – Pakistan has one of the lowest tax-to-GDP ratios in the world,around 12%, because tax evasion is rampant in the country. Therefore, thegovernment has compiled lists of high net worth individuals, a database ofmore than 700,000, who are evading taxes and 3,100 of them have alreadybeen issued notices. These are resourceful people who have purchasedproperties worth Rs20 million, bought 1800 cc automobiles and earned rentalincomes of Rs10 million a year, but didn’t file their income tax returns.

The government faces a deficit (loss) of Rs2.3 trillion a year because itspends more than it earns, which leaves it with little money to spend onits citizens. Unable to increase its revenue, the government resorts toborrowing from banks so it can continue its day-to-day operations and dodevelopment projects (schools, hospitals, roads and dams etc). Experts sayour undocumented economy is almost the same size as our formal economy.Bringing the big tax evaders under the FBR’s net can help the governmentincrease its revenues and reduce its reliance on borrowing.

Non-filers, people who don’t file their income tax returns regardless ofwhether they pay tax or not, will be penalised, Federal Finance MinisterAsad Umar had said during a session of the National Assembly in October.The government is trying to make life difficult for non-filers.

It has restricted non-filers from buying new cars or property worth morethan Rs4 million. Only overseas Pakistanis are exempt from this restrictionand so are people inheriting property. Similarly, non-filers who willpurchase automobiles below 200cc (engine), such as rickshaws andmotorcycles, will also be exempt from this restriction.