Culture and tax culture

In our daily life we are encountered with the word “culture” but do we really know its meaning also. Instead of resorting to philosophical discourse we can precisely define “culture” as “learned human behavior” to transmit the ingredients of surrounding culture to incoming generation. Every human being is gifted with certain instincts at the time of his birth e.g. inhaling, exhaling, sneezing, urination etc. Human beings do not learn these instincts from anyone as those are inbuilt and necessary for survival of man. Gradually with the passage of time, the child starts learning from his surrounding environment like language, crawling, walking, eating etc. As the time passes, he learns about the religion and customs of his family and society and adopts them. This is the learned behavior of a human being from his surroundings and society which also includes likes, dislikes, avoidance, ignorance, fear etc.

Now the question arises what is tax culture? As we have learned that culture is the learned human behavior from man-made environment, tax culture is also part of man-made environment. As we need money to run our households, in the like manner, governments need money to run the affairs of the state which is largely extracted from public in the form of taxes. Despite paying the taxes knowingly or unknowingly to the state, a common man has little knowledge of taxation system in Pakistan. This is mainly for the reason that our man-made surroundings (culture) do not offer any discussion or impart knowledge about the taxation system.

A new born baby is made to learn to hand shake with others, taught about religion, admitted to school but not about taxes. Reason is very simple that tax is not an ingredient of our existing culture although it is part of existing legal system. It is not part of our culture because it is an imported concept and we have not thought it ourselves. In Indo-Pak sub-continent, people were quite familiar with land revenue and zakat but newly introduced taxes on income, sales, imports etc were not known to this part of world. Those were introduced by the British and Central Board of Revenue was also established in 1922 but unfortunately the general public know little about those taxes although it attacks their pocket regularly.

A question arises when there are so many imported cultures in Pakistan e.g. mobile phones, McDonalds, KFCs, Subways, M&S, Adidas etc and those have been accepted and adopted by the people then why the tax culture is not accepted and adopted in Pakistan. This query reminds me a firsthand story in which a newly married girl who had gold jewelry with her in dowry was so much worried about the payment of zakat on that jewelry on annual basis as she did not have cash with her. To pay the zakat she needed liquidation of gold jewelry which was not acceptable to her. The point is why she was worried about zakat obligation? The answer is simple that she had learnt it from her surrounding culture that zakat is obligatory on gold jewelry on certain threshold but her culture does not offer her knowledge about the threshold of income tax obligation. If she does not pay zakat on gold jewelry she will be socially accountable from her relatives as they would ask her on required date whether she has paid the zakat and how much and to whom it has been paid. On the contrary, nobody would ask anyone about the discharge of his income tax obligation as it is not part of our culture. Even if someone asks a person about discharge of his tax obligation and if he has not discharged it, he would not be accountable socially and his surrounding cultural environment would not tease him.

Taxes are levied through legislation by our chosen representatives and those are collectable through legal procedure. On the contrary, we see that zakat is assessed and paid by the public on their own as it has been accustomed in our lives. Unless taxes are also accustomed by the general public like zakat we would fail to evolve self-serving taxation system and have to enforce it through bureaucratic hierarchies.

If we want to make tax culture as part of our human culture, then we shall have to realize that it is a two way stream, in which one side pays tax voluntarily as a legal obligation, and on the other side the payer gets its return in his daily life in the form of health and education facilities, security, employment opportunities etc. We see in our daily lives that on marriage ceremony, we pay cash gift to groom and bride groom. It has been accustomed in our lives and the bride and bride groom will pay back cash gift to donors on some other occasion. This system is self-serving and not enforced by any law or civil bureaucracy. It is a system of give and take and where one side is paralysed the other side also does not work. The sooner the paying side and receiving side realize their legal obligations, the more beneficial it would be for us as an individual and a society as a whole.

The writer is a Commissioner Inland Revenue, FBR

faisaldarfbr@gmail.com