Sir: Taxation system of Pakistan paints a dismal image. No scheme to initiate welfare programs can succeed without updating the tax system. The inadequate expenditure on health and education is because of fragile tax network.
Although agriculture of Pakistan accounts for 19.53 per cent of Gross Domestic Production (GDP), employs 42.3 percent labors and is 70 percent of total export, it contributes to less than 1 per cent in taxes. Manufacturing sector, that has a share of 13 per cent in GDP, pays around 52 per cent in taxes. The high tax rate of this sector hampers the industrial development. More alarming, the General Sales Tax (GST), which is 17 per cent, is one of the highest in the world. The average GST (an indirect tax) in Asia is about 12 per cent.
Pakistan’s Tax-to-GDP ratio is 12.6 per cent, and it is the lowest. Turks pay 24 per cent of their GDP in taxes and Americans 28 per cent.
The Federal Board of Revenue should be made autonomous body like the State Bank of Pakistan.
Besides, a policy needs to be devised to bring more sectors in the network of tax because Pakistan’s ranks at 162 in ‘paying taxes’ index in the World Bank Doing Business Report 2013. Moreover, the authority of tax exemption should be vested in Parliament instead of Federal government. Thus, reforms are possible. It only requires the will of the government.
SADDAM HUSSAIN SAMO
Khairpur
Published in Daily Times, September 2nd 2017.
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