Imbalanced taxation a challenge for Pakistan’s economy

The tax burden on the salaried class in Pakistan surpasses the collective tax contribution of exporters, notably undertaxed retailers, reports WealthPK quoting data compiled by the Federal Board of Revenue (FBR).

Despite subjecting the salaried class to heightened levies in the recent fiscal budget, a considerable number of retailers have been inexplicably granted exemptions from tax obligations, apparently due to political considerations.

It is unsurprising that as part of the IMF program, the government is imposing additional taxes on the general populace while refraining from levying taxes on real estate, retail enterprises, and substantial landholders.

The principal predicament lies in the fact that substantial corporate entities exercise excessive influence over the country’s financial decisions. The efficiency of governmental institutions has witnessed a decline, hampering the nation's quest for economic prosperity without reliance on external assistance.

Owing to the absence of diversification in the sources of tax revenue, the nation has developed a heavy dependence on foreign aid. The ratio of tax collection in Pakistan relative to its Gross Domestic Product (GDP) has consistently hovered around 10% (required 18%) over the past decade, and this trend is exacerbating.

Of particular note is the fact that the wealthy stratum of the society, which commands a substantial share of the nation's wealth, appears to contribute disproportionately low taxes in comparison to their luxurious lifestyles. Regrettably, the Federal Board of Revenue (FBR) has yet to take substantive measures to address this concern.

Recent events have brought to light a critical report issued by the IMF, highlighting numerous challenges and potential threats to our economy. Ideally, this report should have served as a clear push for our leaders to take proactive measures, yet regrettably, no substantial actions have been taken in response.

Furthermore, an ironic situation emerges as the government celebrates external funding from various countries and international entities to strengthen the economy. This situation highlights the inefficient use of our country's own resources and its ongoing challenge to achieve self-reliance.

Evidently, Pakistan finds itself on a downward trajectory leading to economic hardship. The current path lacks sufficient measures to reverse this failure and re-establish a path aligned with contemporary democratic principles and economic advancement, underpinned by a progressive taxation framework that will eventually help out the country in its self-sufficiency.

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