Sat. Oct 31st, 2020

Strong reaction to Gilgit-Baltistan taxation bid

Special Reporter

Islamabad: Not many are trying to openly defend the decision of income tax imposition in Gilgit-Baltistan. At least not the elected representatives of Gilgit-Baltistan, mostly belonging to the Pakistan People’s Party!

In fact, the GBLA deputy speaker, Jamil Ahmed of PPP, has gone a step ahead and asked the people to “not pay taxes”, because, “it is illegal and unconstitutional”, in his words.

GB Council member Professor Ibrahim and Amjad Hussain Advocate, both from PPP, independent candidate MLA Rizvi, MLA Janbaz, MLA Mirza Hussain, Hafiz Hafeez ur Rehan of PMLN, Karakoram National Movement, Jamat – e – Islami, Balawaristan National Front, PPP, workers and leaders, and a vast majority of the general public have rejected and condemned the news regarding imposition of income tax in the region.

The GB Chamber of Commerce has also threatened to launch a movement if the tax imposition bid is not withdrawn.

GBLA Speaker Wazir Baig, known for his independent opinions, has openly supported the taxation idea, terming it to be vital for the government’s self-reliance and sustainability of development initiatives in the region. He has said that without generating revenues through taxes, the GB government will never be able to realize the dream of empowerment and decision making.

Those opposing the taxation bid are saying that since Gilgit-Baltistan is not a constitutional part of the country so taking taxes from the region is tantamount to exploitation of the local population. Absence of the GB representatives from the Pakistani parliament is also being cited as a reason for opposition.

Some are also saying that the Pakistan government has been getting billions of rupees every year from Gilgit-Baltistan, in lieu of General Sales Tax and taxes on the telecommunication companies, which are deducted in advance. The people are maintaining that without giving constitutional rights and status to the people, the government of Pakistan’s collection of taxes from the region is illegal.

Supporters of the taxation regime are using more utilitarian views; including the oft repeated argument that without generating own resources the GB government will always remain dependent on Islamabad, which has economic and political repercussions for the region.

It was expected that the people governed without taxation for decades would refuse to share their hard earned monies with a government which is highly unpopular, because of charges of corruption, nepotism, fiscal fraud and many other ills, real or perceived.

Many are also arguing that since the GB Council is not an elected body, it should not have the authority to make vital decisions related to the region’s future. The proponents of this argument seem to be ignorant of the Empowerment Order, which has concentrated most of the vital powers and legislative sectors under the authority of GB Council.

It is this realization, at some levels, perhaps, that recently led to fissures and friction between GBLA members and some members of the GB Council, most of them being non-locals, headed by the country’s prime minister who is not directly answerable to people of Gilgit-Baltistan, having his electorate elsewhere. Similar is the case with Mian Manzoor Wattoo, the federal minister for Kashmir and Gilgit-Baltistan affairs, who has little or no personal political stakes in this region.

There are reports that Islamabad has been pressing GB to generate own resources, instead of asking for money, every now and then.

If nothing, this taxation episode has exposed the deeper fault-lines in the region’s governance mechanism. Whether the GB Council will be able to have its way, by imposing income tax,  or the people’s reaction will force it to withdraw the decision, only time can tell. For the time being the political stakes are too high for any party to support the taxation bid openly.

9 thoughts on “Strong reaction to Gilgit-Baltistan taxation bid

  1. The ones, whether individuals or political parties, who support imposition of tax on GB are traitors. They are not sincere with their motherland but rather prefer to help the dacoits achieving their targets. GBians will not allow this at any cost.

  2. “Taxation in Gilgit-Baltistan”. Session of Understanding Taxes Structure.

    Key note Speaker: Mr. Rashid Ibrahim (Chartered Account), Tax Partner AF Ferguson’s Islamabad, and Renowned Tax expert in Pakistan.

    Session Organizers: Altaf Hussain President GBPI & Ali Ahmed Jan Sir and GBPI Team.
    Learning Objectives: To understand Taxation System and Structure that Exist in
    Pakistan, especially that is implemented in Azad Jammu and Kashmir.

    PERSONAL OBSERVATION & LEARNING :
    No Taxation can be implemented without getting/Offering proper representation (Old or New whatever is , But this is Essence of Democracy for Accountability)
    Taxation is system which must be implemented on the basis of providing equal Benefit to General Public against their taxes paid.
    Identifying Resources of the Revenue Generation points (RGP) and getting the benefit of that for Area i.e. Gilgit-Baltistan.
    Best Taxation Model that exists in Pakistan for GB is Azad Jammu and Kashmir Model. Where Income tax is adopted through “The Azad Jammu and Kashmir Interim Constitutional Act 1974, while Sales Tax was adopted through Sale Tax Adaptation ordinance 1992. In the same line Decision of the Supreme Court 78TAX143 may be taken as guiding rule while implementing Taxation in Gilgit-Baltistan.( Question of Issuing ordinance and Act from National Assembly for Gilgit-Baltistan may be new in this case)
    We have seen Taxation Collection Grid or Revenue Mix of Kashmir as Follow:

    Revenue: Rs
    Provisional Tax = 2.70 Billion
    Electricity= 6.00 Billion
    Income from Council (Kashmir Council) 4.50 Billion
    Federal Tax Share (NFC Share) 6.68 Billion
    Other Mis- 3.72 Billion
    Deficit (Grant from FG) 5.56 Billion

    As per 18th Amendment Education and many other Federal chapters are provincial subject now which is now providing ample opportunities for Revenue Collection and desired Expenditure.
    Developing Expenditures PSDP Programs are considered as to be driver of Social and Economic progress of any country. Once we get our revenue’s collection Points we can use that on our GB PSDP for development of Gilgit-Baltistan.
    Important point which every Citizen of Gilgit-Baltistan must know about it is; we are paying huge amount of Taxes in form of GST i.e. According to rough estimates, the people of UC Danyore is paying Rs. 1,000 to 1,500 per household as GST from their food items and others. Its total population is around 2,600 households and paying GST Rs. 3.90 million per month and Rs. 46.80 million per annum. At the same time, development activities in the area are zero for the last 3 years by the government! This message is for Enlightened and Educated Class of GB, proclaiming that GB is Tax free. In GB we have 70 UC On averages we are paying 30 Million X 70 =2100 Million (2 Billion) approximately to GOP in GST. What development Budget we are getting from Federal Government. Plus there are many Telecommunication companies which are offering service like Ufone, Telenor, Zong, Warid, and Mobilink. In every Rs. 100 card we are paying 18 to 19 Rupees in GST to whom, these companies are depositing this tax in Federal Government Account while we are getting Nil, once we will have our system we can get this share of revenue collection. On average we are paying Rs.500.00 Million in GST only on Telecommunication Head. Further, due to non-availability of Taxation Structure we are losing our Billions which federal Government is earning from Tourism Industry, Hospital Industry, Communication (K.K.H), Municipal, Water and Carbon Financing, Sost Dry Port and other Metropolitan Taxes.
    It is estimated that in Gilgit-Baltistan worth of Mineral that can be translated into Financial and revenue’s generation points is in Billions. Our Mineral Industry is estimated to be of $ 400.00 Billion and more. For utilizing these resources and making them more beneficial for General Public is to utilizing these Natural and mineral resources in professional Manner i.e. through GB Mining Policy and Taxation Policy.
    Once Taxation System is implemented in Gilgit-Baltistan we can build our road map for getting GB’s share in National Finance Commission Revenue Sharing (NFC) formula. Currently Federal government is collecting Rs. 10.00 Billion to 12.Billion from Gilgit-Baltistan through different Channel and without our proper Taxation system, while we are getting no benefit on it. Meanwhile our Legislative Assembly is waiting for Rs.8.00 Billion Development-Non-Development Budget for whole year in GB.
    Before implementing Taxation System in Gilgit-Baltistan there must be comprehensive Analysis of Impact on Society and economy (Pro-Poor Taxation System). Our Taxation system must follow international Best practices that are implemented in welfare states. Our Indirect Taxes must be more on Luxury items and system must be equitable. Like paying of taxation must be equal to getting benefit from that. Plus we can take loophole from Taxation system in AJK and Pakistan’s Taxation system to make our system more effective.
    Another fact is that before imposition of any taxes, the prior step to taken to make Gilgit Baltistan Consolidated Fund account operational otherwise -income will go straight to the Horse’s mouth i.e. the Federal Exchequer. A similar consultancy or figure game was gained in the year 2004 which says around 8 billion potential existed at the time. Currently, it is fairly estimated that Sost Dry Port alone bears the tax potential worth 4 billion under the head i.e. Infrastructure Cess. This figures was not included then. From that year to this year, we can reasonable imagine how much potential has multiplied due to rapid socio-economic development in the region

    Dear Friend, I request all to comment every Point, so that we can build common consensus for Implementing Taxation System in Gilgit-Baltistan. I have firm believed that once GB-Taxation is implemented after comprehensive Analysis we can build GB-Fund to Rs. 30 Billion and more which will increase year by year. Currently we are un-officially paying Rs. 8.00 to 12 Billion to federal Government and getting no benefit, rather Rs.6.00 Billion for GB-PSDP. Its now time to think over the issue and make our Taxation-System for safe and Secure Future of Gilgit-Baltistan and Empowerment of People through SELF-GOVERNANCE RULE ORDER 2009.

    Note: All above comments are totally my personal Observation and Estimated figures. And Question of Constitutional Rights and Representation in National Assembly and Senate has not been taken up in this stage, which is valid till answered.

  3. The constitution of Pakistan not allowing us to pay taxes to Mr. 10 % which turns to Mr 100%. Just shame to GBLA members.

  4. Firstly those arguing for ‘no taxes without proper representation’ have a valid point. How can we owe the GoP when we are paying Rs. 10-12 Billion in terms of GST, proceeds from Soust dry port, invaluable future benefits from KKH and the tons that would be collected from the proposed Diamer-Bahsa dam and Bunji dam. Even if we accept the rough estimates, it doesn’t require much thinking to say that we are paying more than we are benefiting. I mean the term ‘Pakistani’ would mean something only when there is representation in the National Assembly. This pseudo-provincial set up will do no good to us when policies and laws are made in Islamabad while the GB assembly only debates.

  5. The legitimacy of GBLA has been came under serious discussion after the self-reliance incentives tabled by GB Council which is obviously not accountable to the people upon whom its decision is going to be imposed.it is the matter of pride,prestige,honor and dignity of the people of politically towards financially neglected region of the country since its birth. we should say NO to this illegal and illegitimate step until we do not get the equal status as of Punjabi,Sindhi,Pakhtoon or Baloch especially in terms of representation on the decisive platform known as National Assembly of Pakistan. Government of Pakistan! impose,impose,impose as its your constitutional right and its your mandate but impose it on those who fall in the category defined by the constitution upon whom constitution allows you and if you are that much anxious to impose it on us than please enroll us in the same category of legal jurisdiction, we will never go for supporting
    any illegal and extra-constitutional attempt done by you.

  6. When the 13 colonies on the Atlantic coast on America revolted against the British empire, and put forward this slogan of ” no taxation without representation’, it was actually a refusal to pay taxes to the British empire because they were collecting to further their colonialism and occupation.

    However, these colonies which later founded the united states of America, had already got their own system of local government, whereby they were collecting taxes and running their own government, through generation of own resources, and where not dependent on the British to pay their government bills, services and upkeep of government.

    While I agree that we in GB must refuse all direct and indirect taxes (though as mentioned by Kamil we are already paying it) to the federal government until they accept us, as a constitutional part of Pakistan, representation in the NA and Senate, proportional share in the NFC awards and due representation on the CCI and other decision making bodies.

    However, i think strongly that we have to develop our own local government system to run our own affairs and make ourselves financially independent of the ‘grants’ that we get from federal government in the name of ADP/PSDP for provincial/GB subjects.

    Those who are against paying taxes to the federal government on the pretext of constitutional status of GB (especially from the government benches and the non-nationalist parties), must join the nationalist voices to refuse paying ‘indirect taxes’ and demanding royalties or 50% share of GB in all PSDP projects and services that benefit the whole of Pakistan; Indus River irrigating plains of Punjab and Sindh, Pak-China trade via KKH, mega hydro projects, tourism, mineral and forest resources,

    So, my conclusion is, we should in principle link paying federal taxes to constitutional representation, and due share in federal projects in GB, but at the same time develop our own self-government, making ourselves financially independent.

  7. Can any one let me know what is criteria for awarding finance to GB from federal government? Do it be done through NFC award formula?
    What I think is GBians are not getting enough finance as compare to their claim and contribution in form of indirect taxes.

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