Unless state has political will to impose direct taxes on rich, this country will never be able to stand on its feet.
LAHORE: There was no option for this government, but to go for a deal with the IMF, what with depleted reserves, a dismally poor tax-to-GDP ratio and a hemorrhaging of the state exchequer through massive corruption, plunder, tax evasion and abuse of SROs. Known tax evaders have often been allowed to get away promoting the culture of tax evasion and strengthening it.
The Nawaz Sharif government must take concrete, tough decisions to document the economy, land records, order recovery of looted money and cleanse the Federal Board of Revenue (FBR) of known corrupt officers, who facilitate massive tax evasion. Without reducing the defence budget and minimising the wastage of scarce resources that are often diverted to provide palatial housing for serving or retired bureaucrats, along with withdrawing tax exemptions to real estate profits, we will not be able to get out of the mess we are currently in. This country cannot afford being held hostage to provide for the welfare of its bureaucrats. Focus must be on the welfare of the most deprived sections of society, providing them subsidised housing, education, health and other basic necessities of life, especially if the state intends to arrest the rise in extremism and terrorism.
Pakistan desperately needs to levy direct taxes on all sources of income, with the FBR ordering reconciliation of assets versus declared sources of income based on tax records. There is no rocket science involved in documenting all land records, provided the sitting government has no intention of indulging in institutionalised corruption, which has been going on for decades. Otherwise, the tax-to-GDP ratio will continue to widen, forcing us to seek repetitive IMF bailout packages.
The priority should be to build infrastructure for generating cheap electricity by constructing run of the river dams and also cater for water storage to meet our growing needs. There is a desperate need to restore the railways to provide an efficient and affordable mode of transportation for millions of our poor, which can only be done by raising revenue through freight trains. Bullet trains should not be the priority nor lavish funds for PIA. Unless the state has the political will to impose direct taxes on the rich, this country will never be able to stand on its feet. What justification exists for allowing tax-free import of luxurious Hybrid limousines of over 2500cc or ignoring to tax luxurious villas built on farmhouses, spread over acres, merely on technicalities?
Malik Tariq Ali
Published in The Express Tribune, July 9th, 2013.
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