FINANCE Minister Muhammad Aurangzeb, who is visibly satisfied over satisfactory culmination of the deal with the International Monetary Fund (IMF) for a $7 billion package spread over the next three years, has vowed to reduce the tax burden on salaried individuals, while expanding the tax net to cover sectors like retail, wholesale, agriculture and real estate. In an interview with the Voice of America (VOA) on Thursday, he stated that the government has gathered extensive data on non-filers, including their lifestyles, vehicle ownership and international travel, adding that those who hide their income and evade taxes will be restricted from many essential services.
Abysmally low tax collection and over-reliance on external debt are two fundamental ills of our economy but these issues received only lip-service in the past as measures adopted by the successive governments ended up adding more burden on the existing tax-payers and showering more concessions on some sectors and strata of the society that received liberal subsidies at the cost of the poor, without contributing their due share to the national exchequer. One must appreciate the steadfastness of the incumbent government, which is pursuing a pragmatic policy for expanding the tax net even at the cost of its popularity, and Finance Minister Aurangzeb, who is determined to take his clear-headed strategy to the logical conclusion. It is also a reality that the FBR has gathered enough information regarding lifestyle of the potential tax-payers and evaders and the ongoing process of end-to-end digitization of the institution would surely strengthen its hand further. However, it could not proceed further against those identified as tax-evaders or under-filers because of lack of the capacity and now there are plans to hire the required manpower for the purpose. It is to be seen what the government will ultimately do to counter the stiff resistance by pressure groups like traders and private educational institutions that are flatly refusing to pay taxes as is done by honest tax-payers like the salaried class. The Finance Minister has not elaborated what sort of relief the government intends to provide to the salaried people but it is overdue in view of the fact that highly qualified youth and the skilled work force prefer searching for jobs abroad in the face of a multitude of taxes. Apart from retail, whole-sale and real estate sectors, the agriculture sector too is reluctant to pay taxes despite the fact that it remained consistently the focus of subsidies and relief packages.
The Finance Minister rightly pointed out that despite a 29% increase in tax revenues last year, the tax-to-GDP ratio remained at 9%, a figure too low to stabilize the economy. Therefore, there is no option but to expand the tax net in a big way and it is the responsibility of all segments of the society and the entire governmental machinery to work towards successful implementation of the plan. While appreciating the plan of the Finance Minister for reforms and stabilization of the economy, we would point out the need to pay greater attention for resolution of woes of the common man, generation of economic opportunities and growth of the sectors that have the capacity to take care of the financial concerns of the country like IT and telecom and blue economy. Even IMF has highlighted that spending on health and education had been insufficient to tackle persistent poverty and inadequate infrastructure investment had limited economic potential and left Pakistan vulnerable to the impact of climate change. The plan to save expenditure is understandable but what the Government intends to do to mitigate sufferings of those who are going to be affected badly by closure of the public sector entities and merger of ministries/institutions. Development budget must be considered sacrosanct as it is a source of generating economic activities and helps mitigate the problem of unemployment. The low interest of bidders in the privatization of the PIA prompting a delay in the auction process by a month is a sharp reminder that getting rid of national assets at all costs is not a prudent policy and instead they should be reformed and made viable.
