Ms Sumaila Naeem Ch
It is pity that all stakeholders including country’s chambers, business community and lawmakers are stressing on investment in energy solutions and enforcement of law and order so that factories could be run smoothly and foreign orders could be shipped within stipulated time but no one is going to raise voice against lowering the slab of indirect taxes that had broken the back of poor segment of society. Even government is not taking solid measures to promote foreign direct investment (FDI) and increasing share of direct taxes in budget by grilling rich people into tax net and resultantly achieve key economic targets set for the next fiscal year.
Though there are so many proposals and suggestions, which if implement with spirit, could give a sigh of relief to masses. These budget proposals covered recommendations to give maximum incentives to real foreign and local investors, broaden tax net through documentation, simplify tax system and give autonomous status to Federal Board of Revenue (FBR). Besides this, reduction on sales tax to single digit, cut in corporate tax and raising the tax base to improve tax-to-GDP ratio from the current 9pc could also bring a significant change in the country’s economy. However, it is necessary to that indirect taxes should be abolish as soon as possible because these taxes have hiked the inflation and poor are the most suffering segment while rich are enjoying their lives in society.
To understand how indirect taxes are hurting poor people, we can take the example of selling eggs or poultry meat. While selling eggs, shopkeepers levied sales tax and other taxes on each egg. A poor consumer who wants to purchase even a single egg has to pay sales tax and other taxes liable to be implemented on this egg while a rich person does not bother to pay a meager amount of taxes on the purchase of eggs. On the other hand, a rich person when wishes to purchase a luxury item including an expensive car, air-conditioned or a luxurious bungalow, he gets amnesty and other incentives and does not pay taxes. That discrimination in levying taxes, in fact, broadens the gap between rich and poor. In this way, the poor becomes more poor while rich becomes more rich. The incumbent government is suggested that indirect taxes should be abolished so that wealth could equally be distributed among masses and every soul of society could participate in the progress and prosperity of the country.
To give equalization status to all investors, it is necessary that governmental organisations including FBR should weed out all amnesty schemes and giving official pardon to few tax evaders who deposit few pennies in government kitty against their black money. Though these amnesty schemes, temporarily, generate revenue for the government but consequently these schemes are hurting the overall economy since it discourages honest taxpayers.
It is unfortunate that instead of widening tax base and bringing the untaxed sectors into the tax net, incumbent government has taken steps to squeeze the existing tax payers. This practice should be amended and measures should be taken to bring untaxed rich people into tax net while broadening the net. While FBR, which has now become a money making machine, should be forced to achieve its prime objectives of facilitating trade and industry instead of further squeezing those who are already pay their taxes honestly.
It is a good omen that Federal Minister of Finance Ishaq Dar and Punjab Chief Minister Shahbaz Sharif have vowed that they would not recommend any new tax in the upcoming budget and federal and Punjab budgets would be people friendly.
Dar was of the view that there is no plan to introduce any new taxes in the upcoming budget and would instead stress FBR to continue its drive to search for potential taxpayers.
Now time has come to take stringent measures to keep prices of perishable and edible items at lowest level and mini-budgets should not be allowed to come again and again within a fiscal year, because these mini-budgets ultimately hurt consumers badly and their power of purchase perturbed significantly.
The incumbent government is lucky that prices of oil at international market have come down considerably which gives government a chance to meet its economic targets by lowering trade gap. If government could arrest this opportunity fully, it could be able to lower inflation further which is already at historically lower level at this time.
It is hoped that the PML-N government which has long ruling experience, this time, would deliver the masses by lowering inflation, bridging account and trade deficits and meeting other economic targets by abolishing indirect taxes and broadening tax net.