The IMF wants tax net widening  

While the IMF wants Pakistan to tax the rich and widen the tax net so as to ease the burden on the poor and middle class, the political elite, irrespective of whether PTI, PMLN, PPP, or any dictator is at the helm, are unwilling to curtail the black economy. 

Hardly has the ink dried on the IMF agreement, which finally took place after repeated personal requests, pleas, and phone calls by PM Shahbaz and the help of friendly governments. Our FM again stands up in the NA only to state that no new taxes will be imposed on real estate, agriculture, or retailers. Such an irresponsible statement may please the powerful few, who have been beneficiaries of tax evasion, state largesse, amnesty schemes, and reliefs, but it will erode our credibility with the IMF and other international financial institutions. 

As it is, the deprived masses and middle class have been driven to desperation by inflation, price escalation, etc., and any further burden is likely to lead to street-wide protests and chaos, which will damage the already fragile economy. What this country needs is a Finance Minister like Dr. Manmohan Singh who is willing to take the bull by the horn. Pakistan’s national security and state sovereignty itself are threatened by this economic crisis, and hard decisions must be made. PMLN, PPP, and PTI must understand that either the documented economy and revenues earned from direct taxation must increase, or the black economy must be strengthened, resulting in state sovereignty and security being compromised. 

The status quo cannot persist any longer. Imposing direct taxation can curtail the Tax-to-GDP ratio, which is already the lowest in the region at approximately 9.5% compared to 17% in India and 18% in Nepal. Uncontrolled population explosions are an impediment by themselves. The affluent ruling elite would go to any extent to protect their constituency, even if it meant burdening those already in the tax net instead of widening it. The individual rights of the poor and middle class will be sacrificed to appease the kingpins of the black economy. This temporary relief offered by the IMF Standby bailout agreement will soon fade away, and Pakistan will go back to its perpetual financial bankruptcy status, unwilling to take the hard decisions that the economy demands rather than earn the displeasure of these powerful cartels.



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