Pakistan Institute of Development Economics

P & R Vol.2 Issue 6
Why People Don’t Pay Taxes?
Publication Year : 2021
Author: Pervez Tahir

“Taxes have to be collected but what if the collecting organization is inefficient, outdated and corrupt?” Even in the case of road tax, while all vehicles pay the same for equal use, some damage the road more than the others. To the extent this happens, the principle of fairness is violated. In a special televised address urging tax evaders to declare hidden financial assets by the end of this month, Prime Minister Imran Khan observed that Pakistanis were the least tax paying nation of the world. In April 2018, his predecessor, Shahid Khaqan Abbasi introduced his tax amnesty scheme by noting that just 1.2 million Pakistanis filed returns and only 0.7 million actually paid any tax. Similar statements from the high and mighty, tax experts and fiscal analysts can be traced back throughout the seventy-two years of our history. Let there be no confusion, though. Everyone who makes a purchase in the market has to pay something to the state. This includes the entire population, including children buying toffees. These are the taxes whose burden is shifted to the final consumer; the so-called indirect taxes. Over 60 percent of taxes in Pakistan fall in this category. These taxes are extracted out of the people. There is no possibility to evade if you want to consume or use the stuff you are buying.