Broken system

Letter July 16, 2023
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ISLAMABAD:

Our country has finally received another lifeline from the IMF and friendly countries. The IMF made the government take tough steps before agreeing to release the interim package. Among others, these steps included increasing the tax burden on the salaried class and raising the interest rate to an all-time high of 22%. However, I am afraid that these measures, aimed at curbing spending on the instructions of the IMF, might not work. The main reason behind this is that more than 75% of our economy is undocumented. Only a handful of people pay taxes, and most of the money-rich sectors either operate on a cash system with no way to measure their real worth or are exempted from the tax net under various pretexts.

For example, the agriculture sector in our country has never been brought under the tax net or documented for tax purposes. While small farmers can’t even make ends meet, the big landlords and others hide their money under the pretext of agriculture and become filthy rich. Similarly, there are fewer than two million taxpayers in a country with a population of about 230 million. Even if the government includes all the salaried people in the tax net, it won’t solve our problems. Our government has never been strong and principled enough to stand up to cartels and big businesses that benefit from this broken system. Our politicians are either part of those groups or are financed by them, compromising their ability to take the necessary measures to fix the system.

I wonder if all the money in the world could put the country on the road to prosperity without fixing such a broken system. I am afraid it won’t be too long before we are seeking a 25th program from the IMF.

 

Published in The Express Tribune, July 17th, 2023.

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