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04
Oct
2010

It is the point that clicked in my mind when I was sitting in a TV program discussing Pakistan’s Economy a little while before. Actually the concept is linked with my thinking that taxation when imposed is irrational and when developed can bring great positive impacts to economy & society.

 

Let me not discuss the tax numbers of the country neither a long debate of what has happened in Pakistan. I have a fair idea that you must have an idea of it. It is because of media activism that you people are well aware of the tax as monster.   

 

I can not go with classical economists neither with the conventional discipline of tax science. But for me Tax is the product of government. I know you can raise objection that if it is a product so we can avoid buying it. I think we need to ignore this aspect and try to make one point firm that everybody has to buy this product. The product work for the wellbeing of society and this shall help governments work for social and infrastructure development. 

 

Now it means by selling tax government can have revenues that facilitate them to meet their expenditure and plan projects of public interest. Now as I stated Tax as a product so clients are the kings as usual. It means government has to make few things sure in product management:

 

  1. They need to care that the price of the product must not be high that shall break the revenue lines of their clients. It is actually revenues that pay taxes not businesses or people. So make sure that you care for your client’s revenues. It is not advisable to develop tax in a way that shall close businesses or make people poor. Always try to prosper people and plan taxation. Otherwise in order to grain in short time you can loose long run tax revenues.
  2. In order to have good client and company relationship government need to facilitate clients in earning. It means they have to market Tax in a way that if someone is not capable to pay the tax so make them capable first and then sell the tax to them. No government can be efficient if they are just willing to collect tax rather than investing in TAX. Investment in tax means it is necessary to multiply the clients of your product. In this regard clients are those who have income and earnings. So better invest in establishing businesses that shall facilitate long run tax revenues.
  3. It is always advisable to diversify the tax portfolio rather than putting pressure on selling tax to one strata of economy. Diversification of taxes shall be a great step in economy’s unrest-risk reduction. In countries like Pakistan when agriculture or capital gains [overall life of the country] are wholly exempt from taxation and you never leave a chance to impose taxes on salaried people can create chaos & unrest in society. You can reach a point where people feel better to ignore tax and considered it beneficial. Diversification of taxation portfolio always brings great tax volumes and reduces taxes on units [clients].
  4. Those who are responsible to collect taxes need to behave like a salesman. They need to discuss the means of increasing revenues of the clients so they can pay more taxes. It is advisable to the governments to survey tax buyers that what they can do to increase revenues of their clients [tax payers]. To create a tax culture it is better to present that we are not willing to burden you by taxes. We are more concern to raise your income and have our share that end of the day we will return to the society.
  5. New client development is another aspect to promote taxes. The government has to plan a fix percentage of tax revenues that they shall reinvest on promotion of entrepreneurships. It means once the new business shall grow they shall get back this money with gains.
  6. In all above points I am indicating government as a business entity that sells taxes. It means being a business the government has to care their own cost too. They have to draw smart processes for tax collection. They even need to be cost efficient in all other departments. It means in the phases where government need to reinvest taxes for more taxes so they can survive on the low cost base.

 

I think in countries like Pakistan tax is becoming the symbol of terror. It is mainly because of the record of performance of the governments and the credibility of our governments as robbers. The best taxes are those that people gives with a surety in their minds that this is for our benefits.

 

Generally governments considered thankful if someone pays tax when they impose but tax development is process whereby the taxpayer pays thanks to the government and consider it his investment. A little change of perspective is always required to cultivate harmony in things that are considered as cruel but actually instinct-wise beneficial. It is all the way from when parent become strict with their children for their education to tax development. If you can not change the reality for a time being so change perceptions and then work realities to be sound enough that people can perceive as it is.

 

I think it is the time when TAX authorities and governments have to work the whole concept of taxation from the scratch. They have to build their credibility and then educate people that taxes are not the monsters rather they are the symbol of bright future. But this needs a massive endeavor from the governments at this point of time.

 

I know this post of mine shall receive a lot of criticism but if companies can sell cigarettes that are actually harmful so why government can’t sells tax that is highly beneficial if it is there with a sincere will. It is a time to brand taxation after drawing a framework to develop taxes rather than imposing it by force. It is far better to get out of the text books of taxation science and irrational thinking about taxation. The way is in the middle and this comes from the brainstorming because our country is unique on ground and it always needs unique solutions.

  


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Arshad Khan Says:

well written Saqib......... Now changing perception of buyer(tax payer) will be most difficult task for the salesman(FBR) and company(GOVT),, I think Market Development strategy will be the keypoint to make TAX a diversified product, rather than penetrating product.


04 - October - 2010 05:37:55 PM

Amit Parwani Says:

as usual a mind blowing post, a little crazy but equally fantastic and perfectly integrated with understanding of management and marketing strategies. Being a 55 years old economist I think I need to hear and think over the young ideas like this.


03 - October - 2010 10:37:58 PM

telemall Says:

good job nice work do more for this site

23 - October - 2014 12:42:03 PM

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Mr. Omer

Mr. Omer [1982 born] started  his professional career as a commercial / investment banker after achieving Gold Medal in Finance at master level from University of Karachi in 2006.

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