Why oppose the RGST?

While it is justified that an agricultural tax be implemented in the country, it is unjustified to oppose RGST.

Farhan Zaheer December 02, 2010

Why is the Reformed General Sales Tax (RGST) such a headache for so many and why does the government keep insisting that it is ‘necessary for the country’?

More than anybody else, people should listen to what economic experts say about RGST first. Talk to any analyst and expert on the economy of Pakistan and they will support the RGST being implemented. They do this because it will help increase tax collection and make a dent in the untaxed sectors of the country’s economy.

Pakistan with just a nine per cent of tax-to-GDP ratio tops the list of countries with the lowest such ratios in world.

Look at our regional countries, our neighbors have tax to GDP ratio which are over 13 per cent, while most industrialized countries have such ratios which are over 40 per cent.

Some lobbies in Pakistan have taken so many general sales tax concessions in the last 15 years that that the originally implemented tax is not even recognizable. It is basically this GST regime which is now being replaced.

The minister for finance has rightly said that ‘powerful lobbies are opposing the RGST’ due to vested interests.

The RGST will not only tax the currently untaxed but it will also bring to the table a uniform GST at the rate of 15 per cent. This will end the present unjustified system in which some industries pay sales taxes as high as 25 per cent while some enjoy rates of only 17 per cent. Something is wrong with this picture.

While it is justified that an agricultural tax be implemented in the country, it is unjustified to oppose RGST because it will affect the common man as it will actually do him a favour.

This is because the RGST will document the undocumented economy of Pakistan which in return will help improve government resources which could then be spent on health, education and infrastructure development.

Would you still oppose the RGST even though you knew that it would reduce tax evasion, help increase the tax-to-GDP ratio and collect taxes from the untaxed?

Farhan Zaheer
The views expressed by the writer and the reader comments do not necassarily reflect the views and policies of the Express Tribune.


Samar | 13 years ago | Reply RGST may prove to be helpful to our economy if fairly collected from elites as well, Because taxation help strengthen any economy if collected and used honestly...
eatisam ul haq | 13 years ago | Reply i think rgst with it self is not so much debatable..the main point is the timing which the gov has selected..when our national instituations have so many leackedgs and gov ant stop that.when inflation is going high and high and when this democratic gov is not ready to decrease his expenditure...so facing these conditions its better to work on weak ares and save mony from there rather wsting energy on rgst
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