The fix and fraud

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The tax collection machinery is in an enigma as vested interests in the business circles are defiant, and are unwilling to come under the tax net. This has landed Pakistan in a fix with the IMF, which is now insisting on a one-fourth increase in sales tax base. The Fund has also outright rejected the appeasement package doled out by the government to unregistered persons in the form of an additional 4% sales tax.

This was to be charged over and above the standard 18% sales tax. A glance at this crisscross hints at capitulation of the revenue generation system, and its utter inability to broaden the tax net which is hardly composed of 200,000 registered sales tax persons, of which only 60,000 pay any tax.

The tactic on the part of unregistered business circles to accept the punitive 4% extra tax is a ploy. First, the cost of it is passed on the consumers, and second, it offers them a convenient route to evade direct taxation. What makes it more horrendous is the authorities' audacity to accede to the unfair demands of the business community, and that too at the cost of national interest.

It is ironic that the government has no consolation or relief for the salaried persons who are taxed at source of their income and have contributed a staggering Rs545 billion during FY25, as big-ticket business, feudal, real-estate and holy cows go unscratched.

The tax sleuths must work on a realistic format of broadening the scope of taxation, and that means not only genuine reforms in the culpable bureau but also application of stringent laws to rope in the dodgers.

It has no choice but to be obliged to the IMF that wants, at least, 50,000 more persons in the sales tax net. It's high time for the FBR to focus on the budgetary tax target of Rs14.13 trillion, which is 9% more than in the previous year, and not to be content with unverified claims of collecting Rs455 billion additional tax from retailers. A new and ordained across-the-board tax regime is indispensable if the economy has to stand on its feet.