Flawed taxation

It is a bitter reality that those who must be taxed are the blue-eyed, and the salaried class is made to face the music. Statistics from the FBR confirm that phenomenon as the middle-income salaried class has poured in 300% more taxes than exporters and the filthy rich in the country. Perhaps, the culpable tax machinery is inefficient and lacks the muscles and mandate to go after the aristocrats and contents itself by fleecing those who are already in its tax ambit. The legislature and the executive are equally to be blamed for this biased approach. The salaried class is the easiest scapegoat. During the ongoing fiscal year the tax rates for higher income slabs were revised upward to 40%, but at the same time the prosperous exporters managed to sneak out with a simple raise of one-percent in their tax contribution.

It is a pity that the employed people, already struggling to make ends meet, were made to pay Rs243 billion in the first half of the current fiscal year, and the revenue generated from exporters and retailers was a little over Rs80 billion. Likewise, the tall claims of expanding the tax net were found to be submerged again with an additional burden on the already taxed-to-death commoners. This pattern is likely to continue as the government plans to extract a whopping Rs500 billion, till June 2025, from the salaried strata, because the so-called visionary gimmicks of Tajir Dost Scheme for retailers has failed. Under a new mechanised revenue source – section 236G and 236H – the burden is once again being passed on consumers from retailers.

This pyramid of taxation is flawed. No economy can bounce back by culling its middle class and entrepreneurs with tax burden, and letting the rich and the powerful go scot-free. At the same time, the gaps between expenditure and income cannot be filled by creating new loan liabilities as has been the case. Pakistan is in need of wealth generation and an across-the-board taxation on the premise of income of businesses. The question is: who will bell the cat?