Direct taxes come with implicit control of polity over their governments.
ISLAMABAD: The news item “Economic rescue on the cards: Ishaq Dar calls for public shaming of tax evaders (January 16)” exemplifies the lack of resolve of our government to address the ills of the economy. The proposed move is merely an adhoc and a ceremonial fix to a deeper problem. If the honourable minister is serious about a “transparent tax collection system”, he should outline where he thinks most of the problems are and what he aims to do with all of them.
Worldwide, corporate taxes account for 30 to 70 per cent of all tax revenues. According to the Planning Commission (2011), nearly 80 per cent of our ‘white’ economy is controlled directly by the government. How much do we receive in taxes from these enterprises and what is lost due to a lack of productivity? The government gives a large (real or implicit) subsidy for Sui gas as seen from the long lines at CNG stations and the extensive load management that we are experiencing in residential neighbourhoods and industry. As a consequence, our industry is escaping to more advanced economies, such as Sri Lanka and Bangladesh (the irony is fully intended), with this resultant loss in tax revenues. This shows a lack of commitment or political resolve to address major issues and one wonders why that is the case.
Direct taxes come with implicit control of polity over their governments. If people see a large portion of their incomes going towards paying taxes, they ask what the government is doing with this money. This is not so with indirect taxes or government income from other sources, such as aid or natural resources. Our government collects around two-third of its tax revenues from indirect taxes, thus bypassing an important accountability mechanism. It would be wonderful if academics and other professionals were to step forward and work with the media to highlight these shortfalls in public information in order to apply pressure on our leaders to find effective solutions and not just ‘sound bite remedies’.
Dr Adnan Khan
Published in The Express Tribune, January 17th, 2014.
Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.
