The financial system of the country is on uneven trajectory as the process of making and breaking is going on unabated since inception. If a scheme is introduced for one term, it is rejected in another term by another team of financial managers. As a result, a practical system to fix taxes and duties as well as a mechanism of revenue collections could not be evolved. The laws are strictly made in a way that no one would be able to indulge in tax evasion, but the same laws are blatantly violated at the implementation stage. According to Minister for State on Finance and Revenue, the government is going to introduce an amnesty scheme for the citizens who have stashed their money in foreign countries. The scheme will apparently provide the people an opportunity to bring their foreign assets back to the country. The government has also made a plan to rationalize tax rates and will raise the minimum slab for charging income tax to Rs800,000 from the existing Rs400,000. The rate of the corporate income tax will also be gradually reduced from 30 percent to 20 percent.
In the wake of increase in the import bill, which reached $55 billion during the last fiscal year, the foreign exchange reserves have significantly declined. Another blow to the foreign exchange reserves is imminent as the government has to pay $3 billion to the International Monetary Fund. The export sector has recently revved up to some extent after four years of giving bleak performance. However, the rising gap between imports and exports created a huge trade deficit of $32 billion and increased pressure on the foreign exchange reserves. The authorities who are responsible for the payment of sales tax refunds go in hibernation and the exporters have to knock the doors of courts to get their dues back. This is common practice in every government department as an effective system of check and balance of the government officials is absent in this country. It is yet to be seen how the government meet its targets by launching an amnesty scheme, it is plausible to rationalize the tax rates and reduce the number of taxes. The tax system should be simplified and authorities of the officials concerned should also be curtailed. Otherwise, the people would continue to avoid payment of taxes and the government would continue to introduce amnesty schemes without any positive results of any kind.
