Pakistan’s tax system is believed to have inbuilt imbalance and it has considerable expanse for tax evasion. These issues are clearly depicting a takeover by a specific lobby which is powerful enough to decide how much it needs to pay for the taxes. The system in general is only meant for the working class either it be lower class or middle class.
The elite lobby which has its own terms and conditions is powerful enough to reach on a mutualy agreed plan with the state in regards to the tax they need to pay. Technically the percentage of the tax which is paid as compared to the contribution to GDP which is 20% is not justified. Our Government system which is from day one dependent on the taxes for funding majority of the operations is by default on the weaker end in this case. In FBR officials own words the textile industry is the backbone of our economy and our fertilizer industry is considered important from national security perspective.
[junkie-alert style=”white”] It is very clear and evident that how to what extent the government had to bow down in favor of industries from these sectors. [/junkie-alert]
Comparing the manufacturing sector with the services sector. The taxes paid by the manufacturing sector is almost 65% of the tax receipts at the government end. Most of the taxes are indirect taxes. As per as research 50% of the indirect taxes are collected from the manufacturing sector.
[junkie-alert style=”white”] Contrary to the manufacturing sector, the agriculture sector’s contribution to the taxes is just 1% whereas contribution to the GDP is 20%. [/junkie-alert]
The powerful sectors enjoy the advantage of tax exemptions which are through legal way of course. The exemptions are granted on the order of the Chainman through statutory regulatory Orders (SROs). Which is a tool used by the elite to turn everything in their own favor. The bargain includes another advantage too that is exemption from Income Taxes. We are contributing towards the GDP we are the one creating employments, this the view of those elites which enjoy the exemptions.
[junkie-alert style=”white”] The case of services sector is not much different which contributes over 50% to the GDP but the contribution towards taxes is just 30%. [/junkie-alert]
According to Dr. Hafeez Pasha Chairman of the Panel of Economists, problem is not the SROs but the built-in features in structure of the tax system, Income Tax Ordinance for instance provides with hidden exemptions along with concessions and special treatment to a specific class.