SIALKOT: Pakistan has potential to generate Rs 8,000 billion tax revenue annually by eliminating SROs worth Rs 500 billion and broadening the tax net. Progressive and equitable tax regime is vital for poverty reduction, social justice and human development.
These views were expressed by Syed Akhtar Hussain, project officer of the Tax Justice Campaign Pakistan, while talking to journalists here. Muhammad Arsalan Khan (Coordinator The Network for Consumers Protection) was also present on this occasion.
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Syed Akhtar Hussain revealed that the tax system in Pakistan is unfair and put burden on poor and middle classes through number of indirect taxes, while rich and affluent find several loopholes to avoid taxes. This system is not only creating debt burden, increasing fiscal deficit and fueling poverty but also leading to the concentration of wealth and its undue effect on decision making.
By abolishing Statutory Regulatory Orders [SROs] government can mobilize additional Rs. 500 billion. Changes in tax structure and incidence of tax have significant implications for poverty reduction through increasing public expenditure on social sector- while with current low tax to GDP ratio- which was 8.5 percent in year 2013-14 it is hard to maintain pro-poor expenditure.
He said that said Tax Justice Campaign has made following recommendations to develop tax policy based on equity principles:
Broadening tax net, progressive direct taxation of income, wealth, and property transactions and gradually reducing indirect tax especially sales tax which is putting undue burden on poor, eliminating SROs, revenue loss worth Rs.500 billion, taxation (customs duty, excise levy, and sales tax) on commodities (luxury items) purchased largely by high-income groups, subsidies on goods purchased by low-income groups, fairly taxing all economic sectors—some sectors e.g. agriculture, wholesalers, distributors, retailers, real estate, stock exchanges, are not contributing towards the tax revenue in proportion to their share in economy , policies that conforms to the Constitution that calls for welfare-oriented schemes to include subsidized/free medical and educational facilities, low-cost housing, drinking water and sanitation facilities and employment guarantee programmes
He emphasized that collaborative efforts are essential to sensitize and mobilize policy makers, legislators, business community, media and civil society for creating equitable, fair and prosperous Pakistan- for which all have to pay their due share of taxes according to the income and capacity. He emphasized on mobilizing domestic resources to finance essential services such as education and health where Pakistan’s spending is very low.
