CBR Complaints - Charging Income Tax from Poor people whose income is below Tax Ceiling
CBR
View All CBR Complaints 19 Jul, 2009 By Sajjad AhmedCharging Income Tax from Poor people whose income is below Tax Ceiling
When CBR deducts Advance Income Tax from pre paid calling / phone cards, It makes even those people to pay income tax whose income is below the ceiling fixed for income tax. And for those poor people there is no system of refund claim.
Thats one of the worst kind of treatment to those poor people who are hardly managing to earn their living and still paying income tax.
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This is why INDIRECT taxation is so bad. Its is very unfair for the lower income groups. In all countries where the system is fair, a major portion of taxation is DIRECT on the income. The higher your income is, the higher the rate of income tax on you in a fair system. Pick up any civilized country and you will notice this rule.
In our country, government relies heavily on indirect taxation for example on basic life amenities like petrol, diesel, electricity, food, telecom services, and so on. So its not INCOME tax. Its more appropriate to call it EXPENSE tax. If you do some simple math, you will see why its worst for the lower income group for whom the basic expenses of life (food, travel, communication) take up the bulk of their budget. A person earning Rs. 6,000 usually spends all of it each month. So all 6,000 is tax, thanks to the indirect taxation. That's 100% of their income.
Compare that to a person belonging to a higher income group say Rs. 200,000/month. He/she is more likely to spend a lower portion of the income each month. If he spends Rs. 100,000 a month, only 50% of his income is taxed through this indirect taxation bhatta.
I think its criminal to call it tax. Its bhatta from the lower income groups...
I totally agree. We are far away from VAT ..at least should have direct taxation. But if this the money they get most easily , you rightly said it bhatta, no one has ever agreed to lower this bhatta on say Petroleum products and dont see anyone will do that. The is the easiest way to get money out of the poor people pockets and the elite will never pay the tax on their high incomes.
Who said Pakistan is a welfare state when we can see these misgivings?
Thanks Iqbal Qaiser for the comments and for pointing out that this system of taxation, by default, taxes a greater share of income of poor and lesser share from the rich. Very valid observation. Why dont you post this issue as a complaint too?
Thanks HS for the comments.
CBR has applied both direct and indirect taxation. I'm one of those salaried individuals whose tax is deducted directly from the salary, in advance. And then we again pay the same income tax on expences. And system of refund is so complicated that refund is almost never thought of.
@ Syed Afzal Hussain
"Welfare State" looks like some dream statement.
