ISLAMABAD: A joint study, carried out by Oxfam Pakistan, and Sustainable Development Policy Institute (SDPI), has urged the government to address the issues of 50 million poor people across the country as the difference between income and consumption is widening further owing to unfair and regressive taxation.
According to the study the 20 per cent richest of Pakistan are getting richer as they are consuming five times more than the 20 per cent poorest.
The consumption share of top 10 percent was 31.3 percent while the share of bottom 40 percent was only 20 percent in 2011-12, which means the consumption of 18 million richest people was one and a half times more than 72 million poor people.
The research signifies the causes of inequality in a number of ways, including lack of opportunities to access health care and education, unequal distribution and access to land and capital.
Unjust policies, including unfair taxation, low spending on social protection and services has increased inequality.
About 60 percent of Federal Board of Revenue (FBR) income comes from indirect taxes that show regressive nature of taxation. The research reveals that due to tax exemptions Pakistan loses Rs500 billion annually which is 1.5 times the annual budget for education. Pakistan can get additional tax revenue of Rs 80-115 billion if the exemptions on agriculture are withdrawn.
Lack of tax revenues puts pressure on the budget and leads to inflationary monetary policies which which have an important impact on the distribution of real income of the poor.
Low tax base also implies that there is little room for investments in nutrition, public health and education.
