PAKISTAN Institute of Development Economics (PIDE) has a track record of making relevant and valued input in efforts to reform the economy and the tax system and it has lived up to its traditions by emphasizing that the country must reform its taxation system by expanding the tax base, fully digitizing its processes, and reducing the burden on the salaried class during its latest conference.
More relevant were the remarks made by the delegate of the World Bank who described the system as ‘unfair and absurd’ as only five million file returns in a country of 240 million.
The tax collection has definitely increased due to efforts of the Government, which intends to achieve the target of tax-to-GDP ratio of 13% in the medium term but regrettably there are no firm clues as yet that this will be done through fair and transparent means.
Retailers have become untouchables and there seems to be no realistic plan to assess true income of professionals and retrieve due taxes.
There is over-reliance on retrogressive GST and withholding taxes and now the Government is on record having adopted unfair practices to raise money as we witnessed in the case of sugar, denial of relief in the prices of POL products and anti-consumers method of fixation of electricity prices.
More shocking was the revelation made by Vice Chancellor of PIDE Nadeem Javaid that 40% of the development spending (meaning taxpayers’ money) was siphoned off in the form of commissions as AGPR alone gets 5 to 7% share for clearance of every bill.
The Government should listen to the valuable proposals regarding meaningful tax digitization, simplification of tax codes and performance-based incentives, among others, to restore taxpayer confidence.