Taxing the rich

The govt — who had been making tall claims of providing relief to the poor once in control — seem to have budged

Rulers generally shy away from taxing the rich. Even in the West — where a healthy tax culture exists — the myth prevails that taxing the rich would shatter the economy. How would then somebody at the helm of a developing country like Pakistan dare take the risk? Imran Khan had, however, promised to be different. As opposition leader, Khan would hardly miss an opportunity to lash out at the government for sparing the rich when imposing taxes. On occasions difficult to count, the PTI chief had called it his mission to “tax those whose luxurious lifestyles do not match the amount of taxes they pay”.

But in the saddle now, Khan is starkly the opposite. His government has, while unveiling its first annual budget, burdened every income group — irrespective of its capacity to bear any additional burden — but has favoured the rich with tax break. According to a report in this newspaper, the Khan-led government has given Rs20 billion worth of income tax exemption to the richest of the rich in Pakistan in the fiscal year 2019-20. In contrast, the government has squeezed the salaried class further by adding Rs50 billion to the amount of taxes they are already paying.

So the tax exemptions for the rich makes up 40 per cent of the amount the government would collect in additional taxes on the salaried persons in the coming fiscal. Benefiting from the Rs20 billion tax exemptions are banks, cement and car manufacturers, and textile, fertiliser and food companies. Some of these businesses are owned by those who make it to the list of top 10 richest Pakistanis. The report in this newspaper says that the previous government had been resisting the demand for the favour from the big companies for the past three years. On the contrary, the incumbents — who had been making tall claims of providing relief to the poor once in control — seem to have budged. As the old adage goes: easier said than done.

Published in The Express Tribune, June 27^th, 2019.

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