New, improved tax model suggested
Budget proposals have no significant impact
Tax burden on the poor is gradually increasing
Islamabad: [May 25]
The Pakistan Economy Watch (PEW) on Wednesday suggested an improved tax model that can generate adequate resources for the government without hampering economic growth and provide economic justice.
The new model can help transfer resources to public use in an efficient manner ensuring social justice for weaker sections of the society, it said.
Majority of budget proposals have no significant impact on economic growth as policymakers ignore it, said Dr. Murtaza Mughal, President, PEW adding that it is a useless exercise as unfair tax regulations continue to hurt the growth.
Talking to Chairman Coordination FPCCI, Raza Khan, former president ICCI Nasir Khan, former president RCCI Hussain Osgzan and other business leaders, he said that over-taxing the economy while avoiding taxing favourite sectors is putting the economic and revenue system down.
Avoiding concerns of genuine taxpayers and emphasis on meeting revenue targets without considering its impact on the economy is a self-defeating exercise carried out in a mechanical way, he added.
Dr. Murtaza Mughal said that concentration on industrial expansion can provide much-needed funds without hurting the honest taxpayers which is yet to be realised.
Tax system needs to be transformed in an equitable, realistic, investment-oriented and business-friendly arrangement, he stressed.
For this, he said, issues like amnesty schemes favouring tax evaders, alliance between the evaders and officials, steps supporting parallel economy, unprecedented exemptions, avoiding taxing speculative transactions, ignoring abusive tactics of multinational companies and oversized state machinery needs to be resolved.
Keeping public representatives away from whole process, reliance on the foreign experts, lack of meaningful interaction with the taxpayers, and facilitating monopolies are also matters of great concern, he said.
At the occasion, Raza Khan said that tax burden on the poor is gradually increasing; poor pay over 20 per cent of their income as indirect taxes while rich pay less than10 per cent of their income as indirect taxes which will lead us nowhere.
He said that a paradigm shift is needed to ensure enhanced revenue generation as the real potential of taxes is not 1600-1700 billion rupees but four trillion rupees.
Industrial growth can be triggered if investors are not asked for source of funds. This will also help contain flight of capital and overseas investments that are hurting economy, said Raza Khan.
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