Daily Times

Sir: Government has reiterated its commitment to initiate administrative steps to plug loopholes in the existing tax regime. Together with this, it is reportedly raising additional revenue of Rs 386 billion to post an ambitious revenue target of Rs 2,338 billion for the next financial year. The saga of revenue target fixing and subsequent collections has always proved no more than mere speculation. The sword of inequitable taxation, mass evasions and concessions are clearly visible in the records of both military and civilian regimes alike. Moreover, keeping in view the contributing factors, the trend, unfortunately, does not seem to be coming to an end in the near future.

However, there are no two opinions regarding a complete shift of our economic priorities. According to economic managers, the current GDP growth marks a figure up to four percent, while remittances are recorded at $ 13.5 billion that pose positive developments. Notwithstanding this, we continue to lose local and foreign investment, which has drastic implications for the state of our governance, corporate sector, lifestyle and the country’s image abroad. Taxation is deemed to serve as a catalyst for industrial expansion and financial strength. On the contrary, in Pakistan it has been employed as a tool of discrimination and harassment. As a result, local industrialists are shifting their industries from Pakistan to across South Asia and Central Asia, over Southeast Asia and the Middle East and landing in European and American markets.

Similarly, the country is facing budget constraints because of flight and reluctance of foreign direct investment. Even though FBR has time and again introduced a tax incentive policy for investors in line with global trends, it has failed to consistently comply with it. Foreign investors are first attracted with zero-corporate tax policy but then are often trapped into negative tactics to extort taxes. It is because of tax officials’ focal point of meeting revenue targets by any means. Unwillingness to extract tax money from tax evaders, they subject regular taxpayers and foreign investors to harassment by abusing their vast discretionary powers. Meanwhile, the loss of local and foreign investment also results from the absence of appropriate infrastructure. The country is mired in power shortages and a law and order problem. Obviously, where there is no security of life or property or oil to run industries and where there is open proliferation of the business of extortion, investors cannot be expected to come forward.

With this, the image of the country has become so tarnished that when family members receive news of their relatives’ visit to Pakistan, it is upsetting to them. In such circumstances, we cannot expect a flow of fortunes to be an ambitious figure. Therefore, the administrators of the FBR must overhaul the pathetic economic situation by doing away with inefficient administration and regressive tax policies. Government is trying to create a healthy environment by extending tax incentives, especially to foreign investors, but the FBR must not compromise these international trends. Similarly, these incentives will have no bearing if government does not provide an attractive infrastructure. We have to move quickly and decisively and form a strategy and infrastructure rapidly.

MUHAMMAD AZAM SHAIKH

General Secretary, Tax Bar Association,

Larkana