URGING the traders to pay their taxes, Adviser to the Prime Minister on Finance Shaukat Tarin Monday announced that the government would abolish all other taxes except income and GST.
Addressing the Kamyab Jawan Convention in Islamabad, he told businessmen “We all have to pay taxes because if you do not pay taxes, you have no right to vote.”
Despite repeated claims made by successive governments, the tax system in Pakistan remains highly complicated and multiple taxes are one of the major causes of tax evasion.
There have been demands from tax-payers, especially the business community that the number of taxes should be reduced to give incentive to the people to pay their due taxes and also minimize contact between the tax-payers and the tax authorities.
This is necessary because the countries that have made progress on ease of doing business and have achieved higher revenue collection in short spans have minimized the hassle of documentation and interaction with businesses.
New Zealand has a single tax, Hong Kong has three, Malaysia eight and India 13 compared to Pakistan’s 47 which presently stands at 16.
Businessmen complain that in some cases they have to deal with 70 agencies at federal and provincial levels and this over-regulation has burdened them.
They also point out that with 19 or 20 federal payments and filings, doing business has become complicated whereas ensuring ease of doing business could yield much greater returns to the government.
The then Finance Minister showed willingness to introduce single tax system in 204-15 while as Finance Minister, Asad Umar too had announced to club together multiple taxes into a single tax to minimise interaction between investors and businesses with various tax agencies as part of the ease of doing business reforms but nothing happened on ground because of vested interests.
In this backdrop, the announcement of Mr. Tarin is welcome and we hope practical steps would be taken for the purpose after doing necessary homework and overcoming hurdles being created by some circles.
We also hope that traders and other segments of the society would also extend their cooperation to the authorities concerned in enhancing the tax to GDP ratio, which, currently, stands at just 09% and that, as per opinion of Mr. Tarin, needs to be increased to at least 20% to improve growth rate and provide employment opportunities to the youth.
