Taxing Bonus Shares

The recent proposal by the Federal Board of Revenue (FBR) to impose a 15 percent tax on bonus shares is a positive step in taxing wealthy business owners. The tax was previously in place to avoid companies evading tax on profits through the use of bonus shares. It is important for the government to be able to tax the profits of companies as they stand to bring in a bigger share per collection compared to other collection systems such as the income tax.
By taxing the affluent at a higher rate, progressive taxation creates a more conducive environment for investment and entrepreneurship. This approach allows governments to finance infrastructure development, education, and healthcare, which are vital drivers of economic growth. Governments can also narrow the wealth gap by taxing wealthier individuals and entities more progressively.
Taxing businesses more than average income earners is a key measure to level the playing field and promote economic fairness. Businesses, especially large corporations, have greater access to resources, economies of scale, and opportunities for profit generation. A progressive tax system recognizes this advantage and requires businesses to contribute proportionally more towards public goods and services.
The government’s decision to impose a 15% tax on bonus shares highlights the need to reevaluate our tax policies. While this proposal is positive, there are other problematic taxes imposed such as the sales tax on common household items like toothbrushes and toothpaste, which naturally affects lower-income households much more. It is imperative to move away from regressive taxation measures and embrace progressive means of revenue collection. By doing so, we can build a fairer, more equitable society, promote economic growth, and foster social stability. It is the responsibility of policymakers to prioritize the long-term welfare of the nation by adopting progressive taxation strategies that benefit all citizens, regardless of their economic standing.

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