Cost of corruption in businesses too high: economists
This also ends up marginalising genuine businessmen and suppressing job opportunities, they added.Faisal Qamar, an economist, said that when a consumer indulges in electricity theft a household may pay a bribe of Rs500 to Rs2,000 to the meter reader who then manages his bill in an acceptable range, which is Rs10,000 to Rs30,000 less than his original bill.
Besides direct loss to the power distribution company, the bribe increases the power consumption to unreasonable limits as consumers run their high-powered electronic items such as air-conditioners 24 hours a day instead of eight hours use adopted by those that pay full bill, he said.
Similarly, if an importer brings in finished products at 20 to 80 times less than its actual value, he saves 20 to 80 percent duty plus a much higher amount of sales tax that is levied on duty-paid value, he said.
In addition, he said, local manufacturers of similar products from the domestic market ends up paying higher taxes than the importer based on actual production cost of the product.Producers of the same products either close down their factories or reduce the production drastically in accordance with the engineered low demand that is filled by under-invoiced products, he said, adding that job loss is enormous and the investment opportunities dry out.
The bribe taker might have taken minor amount from the importer but the loss to the economy is enormous, Qamar said.
Naveed Anwar Khan, a senior economist, said that most of those that remain out of the tax net do so by bribing the income tax officials and the amount they pay is nominal as compared to the amount they save as income tax.
Since the tax evaders are in millions even nominal amounts add up to bring fortunes to the bribe takers, he said, adding that the tax evasion alone deprives the exchequer of at least Rs400 billion per annum.
The fallout of this tax evasion is that informal economy is growing in Pakistan at a higher pace than formal economy, Khan said, adding that investors are opting out of high tech manufacturing business and prefer engineered trade that saves them huge duties and brings them enormous profits. The cost to the economy is huge as the country is losing its manufacturing base.
Asif Ali Shahid, a certified public accountant, said anti-corruption laws of the country favour the looters, which act as incentive to adopt unethical methods for making money.Even the National Accountability Bureau (NAB) law is flawed as it accepts plea bargain of the looter who goes scot free if he plea bargains to deposit a portion of the looted money.
The policymakers do not realise that if a contract is granted without following procedures by accepting some graft, the quality of the entire project becomes suspicious. “We may end up seeing the infrastructure collapse a few years after commissioning. This would mean spending almost the same amount on the project once again that should have lasted at least for 50 years.”