Equitable taxation

Published August 1, 2024

HERE are two key takeaways from Finance Minister Muhammad Aurangzeb’s speech at a business gathering in Karachi on Tuesday: the salaried class and documented businesses are excessively overtaxed; and there is a critical need for effectively taxing the untaxed and undertaxed sectors including agriculture, retail and real estate. “We are at the end of the road. We cannot keep raising taxes on the businesses and salaried class. We need to bring untaxed sectors into the net,” he said. Indeed, the salaried class and tax-compliant businesses must get some relief from this unbearable burden. The latest hike in personal income tax rates amounts to squeezing out the last drop of blood from salaried individuals. It is not just income tax that they are paying. They also pay a plethora of indirect taxes and non-tax levies — sales tax on goods and services, withholding taxes, petroleum levy, and what not — on every service and good they buy. The reason is well known: whenever there is need of extra cash, policymakers always target the easy prey — salaried people and documented businesses.

Pakistan has achieved a semblance of macroeconomic stability in the past one year, which must be preserved and deepened to ensure sustainable and faster economic growth if our financial state is to improve. That goal cannot be accomplished unless the state starts collecting taxes equitably from where they are due — irrespective of the source of income. At the same time, the government should take steps to revamp and reform the entire tax administration to ensure that no segment of society has to pay more than what is due. Currently, Pakistan’s economy is in a low-growth mode; and any push for accelerating it without creating sufficient fiscal space will result in a deeper and longer economic downturn. Therefore, the minister does not have to be so apologetic about equitably distributing the tax burden across all sectors and segments of the economy.

Published in Dawn, August 1st, 2024

Opinion

Editorial

Court business
Updated 30 Oct, 2024

Court business

The unity and commonality of purpose on display in the full court meeting are what will help the SC endure.
UNRWA ban
30 Oct, 2024

UNRWA ban

NOT content with the war of extermination it is executing against the Palestinian people, Israel now wants to ensure...
Cricket changes
30 Oct, 2024

Cricket changes

WIN or lose, Pakistan cricket seems to be embroiled in a constant state of flux. Just when things seemed to be...
Regional trade
Updated 29 Oct, 2024

Regional trade

If done right, restored trade relations with India can also open the door to better bilateral ties.
Speaker’s remarks
29 Oct, 2024

Speaker’s remarks

THOUGH the ECP has been formally admonished not once but twice for its continuing failure to obey the Supreme...
On the edge
29 Oct, 2024

On the edge

PAKISTAN is on the verge of hitting 50 polio cases this year. A look at the trends leaves one bewildered. We were...