Indirect Taxation Harms Masses

Those at the helm need to understand that you cannot squeeze the large majority endlessly to benefit a few. Even after alarm bells were raised by economists and international financial institutions about the economic quagmire requiring bold decisions, the status quo prevails. Other than pep-talk, there is no effort to collect uniform direct taxation from all sources generating incomes above a declared uniform threshold. The existing FBR annual tax exemption is Rs 6 lakh, which should be raised to at least Rs 8 lakh. Anyone earning above this uniform threshold must pay direct income tax, irrespective of whether they are salaried, traders, farmers, etc. Instead of doing this, indirect taxation is resorted to, with the latest being the proposed Carbon Tax Levy.

Countries all over the world resort to indirect taxation only after they have exhausted all avenues of direct taxation. In Pakistan, it is the reverse. Almost all political parties, both within the government and the opposition, during their respective tenures at the helm of the federal government, have been unwilling to bring their favorite special interest groups into the tax net, on some pretext or another. The net result is that big Arthees involved in irregularities, the wholesale/retail sectors, real estate, tobacco, etc., still evade taxation. Nor are reforms being implemented within existing cartels involved in the sugar, fertilizer, and power sectors. The Power Purchase Agreement with IPPs, guaranteeing payment based on their declared capacities, haunts this country. Even a few IPPs which have not produced any electricity and are shut down due to technical malfunctioning continue to get guaranteed capacity payments. This daylight heist can only occur with the connivance of corrupt bureaucracy and their godfathers within the political executive and powerful stakeholders. How can an agreement for power purchase be justified when the power plants are shut down? It defies logic and reason.



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