CORRUPTION
Corruption is the abuse of public office (with its associated resources
And power) for private gain or for the benefit of a group to which one owes allegiance.
OR the misuse of ones own authority
Typical types of Corruption from the Department
1) Policy Manipulation: The most frequent example quoted by many pertained to the
overnight changes in import duty structures via issuance of SROs during previous regimes.
These Sores were linked with imports of BMW cars, steel items, etc. According to
respondents,
many SROs were designed to favour a single industry at the cost of others, at times even a
single firm.
2) Collusion: Most income tax and customs levies are said to be determined with prior
consultation between the two parties concerned. In customs, collusion takes place in mis-
declaration of items imported, their quantities and values. In income tax, the assessment is
manipulated to favour people who pay bribes and extort money from those who do not.
Similarly in sales tax, factories and retailers are let off with lower levies on payments of
money. Many employees are reported to have a monthly payment plan with different
organisations.
3) Extortion: Many respondents were most unhappy with the level of extortion in the tax
administration. It makes sense, as in the case of collusion and policy manipulation the tax
collector and the taxpayer both share in the benefits. However, extortion supposedly makes
it difficult for an honest taxpayer to live with dignity. It forces one to indulge in a dishonest
practice with the sword of future blackmail always dangling. Most of this extortion is
possible because of the immense discretionary powers that the tax officials have over
taxpayers, coupled with very little accountability.
4) Speed money: Speed money seems to be the most common form of corruption in the
whole of tax administration. The system is well understood by all parties and is not even
considered as corruption by some.
Average monthly take home, without damaging government revenues (read due to speed
money), of a Karachi port-based customs examiner is Rs 50,000. An appraiser takes home
between Rs 100,000 to Rs 150,000 while a principal appraiser makes between Rs 200,000
to
Rs 250,000. Any money that they make because of collusion with the importer is on top of
this. Speed money rates in Peshawar for customs rebate are between 3% to 5%. In Lahore
the
rates overall are about 2% as the turnover is much higher, while Karachi people pay only
about 1.5%.Four examples of highly institutionalised speed money payments at each and
every step in different tax departments are presented in Tables 5.6 to 5.8. One must note
that some of this information may be dated as the various steps outlined in the tables, and
the speed money
rates for them, might have changed as the government keeps on revamping the processes
Involved.
Causes of corruption
Causes of corruption were elicited by both prompted and unprompted questions. The
unprompted question was used so as not to bias the responses while the prompted
questions were asked to estimate relative importance of various causes as researched by
the consultants or as suggested by the Task Force in the TOR. The findings are presented
in table .
causes : %age
Poor compensation 73%age
Discretionary Power 29%age
Lack of Accountability 23%age
Greed 22%age
Societal pressures 21%age
Complex cumbersome procedures 18%age
73% of respondents mentioned poor compensation as a major cause of corruption . The
numbers do not add to hundred because of multiple responses.
Poor compensation is the top cause cited by the respondents. The reason for this
Can be found in how GOP runs its civil service.
Poor compensation is only one aspect. Lack of provision of resources to do ones job, and
complete indifference to this issue, is another manifestation of the same problem. While
the
government may have limited resources, the way it expects its departments to deliver in
the absence of adequate support tends to border on State Sponsored Corruption, as
illustrated below: I joined the service with great enthusiasm and a mission to serve the
people. Unfortunately, I had to start my career with breaking a law and it has been the
same ever since. I was forced to break the law as the State conveniently ignored its
responsibilities towards its employees. My bosses were completely indifferent to our
situation. Islamabad, in its wisdom, simply directs us to open two more offices and then
expects us to fend for ourselves. The situation is so bad that one has to be dishonest just to
keep ones people honest.
I am expected to pay for my petrol when I go for official rounds. I am expected to pay for
paper, typing, photocopying, even postage. All of this is official work. It adds up to Rs
6000
per month. Am I mad to pay it from my pocket? What do they (Islamabad) expect? They
know everything.
It was fairly obvious to us that many tax collectors, at all levels, want to earn an honest
living
but the State forces them to be corrupt by not providing them decent wages and operational
expenses. The stories where tax collectors are expected to deliver by living off the land are
innumerable. It has led to massive demoralisation in the departments as well as lack of
confidence in and respect for their seniors sitting in Islamabad.
The second most frequently cited cause of corruption is the extensive discretionary powers
that the tax collectors have. This is made even worse in the absence of any meaningful
accountability of tax collectors
The ITO can fix any income or refuse any expenditure at his whim. If you go into appeals
you lose precious time and money. First, you still need to pay 15% upfront. This 15% may
