|
As Pakistan's new government grapples with mounting economic challenges, the future of the country's dilapidated tax collection system once again stands between its present day outlook and its future ability to become a much more progressive state.
The future of the tax collection system has especially come to haunt Pakistan's outlook at a time when its economic managers are scrambling to gather enough by way of promises to sustain themselves in future.
This objective is central to Pakistan's future just when the average Pakistani considers worsening economic conditions as a key impediment to improvement of across the board living conditions.
But to make matters worse, recent increases in the tariff for domestic oil and gas, have only added to the woes of common Pakistanis. And that is just not the end of the story, as further increases in the tariff of petroleum products are expected in the coming months, largely because the government elected in February this year strives to fill the gap between international prices of petroleum products and their prices in the Pakistani markets.
For too long, Pakistanis have been accustomed to living with subsidies on a host of items of daily use. While there is a legitimate case for subsidising lives for the poorest of the poor, this can simply not be done in the midst of an inefficient tax collection environment, simply because the government just doesn't have the economic clout. There are other equally grave implications of an inefficient tax collection regime. The failure to force those who earn enough to pay their taxes, simply ends up creating a high probability of the financial system being used for criminal purposes.
And yet, with present trends where less than 1.5 per cent of the country's population pays an income tax, it is practically impossible for Pakistan to enforce writ of the state through clamping down hard on tax evasion.
Going forward, it is essential for any Pakistani government to enforce itself on tax collection by adopting a three-pronged approach.
First, there must be a clear cut demonstration of the government's commitment to curb tax evasion through ways such as making certain that there are no exceptions which amount to disrupting the working of an efficient tax regime. Initiatives such as ensuring that representatives of all classes, including ruling politicians, are made to account for their taxable incomes must be central to creating a credible tax collection regime.
At the same time, the era of giving exemptions to people living in under-developed zones of Pakistan must come to an end. Rather than awarding such tax holidays, it is essential that incentives for the development of impoverished areas must be given through other means.
Second, a full scale effort must be made to bring together a comprehensive system of accountability for making affluent Pakistanis answerable for their wealth. For the past five years, the national tax collection agency in Pakistan known as the federal board of revenue or FBR has claimed to have comprehensively expanded its database of the spending patterns of ordinary people. However, to this day, little concrete evidence has been provided of the ways in which this database has been used to take people to task for evading their tax payments.
Finally, making use of more tax revenue must be central to setting the pace for a philosophically new future for Pakistan. For too long, Pakistanis have found themselves left unable to figure out, exactly how much do they benefit from a system of government where little has been done to meet their needs. Instead, some of the most valuable state resources have been used to the benefit of the rich.
The writer is a journalist based in Pakistan.
|
