Exalted tax target
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The government's intention to raise the taxation bar is fraught with consequences. Having seen a downward revision for the ongoing fiscal year owing to inflation and lower economic growth, the new target of Rs14.3 trillion is an uphill task.
In order to attain it, it has to employ some extraordinary tools that may require at least Rs500 billion in additional measures. Will the beleaguered dispensation once again slap the salaried class and squeeze those who are already in the tax net is not difficult to guess!
There are no two arguments that tax mosaic should be broadened but the point is how come that would be possible without introducing stringent reforms and bringing the holy cows into it. It is a given that big businesses, real estate, agrarian farming and land wielding are exempt from their due to the national exchequer, and coupled with it is the elite capture of the economy that swallows in more than $17.4 billion per annum, according to the UN.
An increase of Rs2 trillion over the ongoing year's target, which would be equal to 11% of the projected size of the economy, will require some tightrope walking and a sustained roadmap. With little or no enthusiastic input from the private businesses in reforming the edifice of taxation, it is assured that the IMF will have the last laugh in setting the target and pointing out sectors that should go under the axe.
While road-mapping tax measures, the government should keep in mind that piling on extraordinary burdens on common people would be self-defeating as regards harnessing the economy on modern lines. The FBR is already suffering from a tax shortfall of Rs833 billion in the first 10 months of the ongoing fiscal – something that underscores the inability to withstand tax escalation.
A repeat of the fiasco as the tax gurus go on an arithmetic hype for book-keeping will call the bluff and derail whatever improvement the economy has made. It's time for the government to get real and broaden the tax territory by encompassing all in it.
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