Taxes provide the most important revenue source for the Government of the People Republic of China. As the most important source of fiscal revenue, tax is a key component of macro-economic policy, and greatly affects China’s economic and social development. With the tax reform, China has preliminarily set up a streamlined tax system geared to the socialist market economy.

I agree taxation should be progressive, but to suggest we are in a position to increase taxes to offset deficits is ridiculous. Also this new revenue base will grow the economy is dangerous. The issue here is not tax, but the tax base.

Over the years the country has done nothing to promote growth. Costs of everything continue to increase. The payment of taxes by only a handful of people does not do much to the economy. And the demanding of money from only few people is ridiculous. The persons under the government control are only the salary persons which are paying tax regularly. The businessman, landlord and the factory owners do not show their income properly to the government and they do not pay the tax. The retail, wholesale and transport sector also do not have a proper record of their income. There is inequality in income distribution.

There is a need to have tax reforms and the sectors that slip by the tax need to be added. Given greater sectorial equity with regard to levy of tax on income, meaningful reduction in the size of the informal sector and reduction in inequalities in the distribution of income, there is no reason why the tax base should not be greatly enlarged in size and scope so that we have not only many more taxpayers who file Returns of Income regularly but also declare significantly higher levels of income and eventually when all is said and done, it is this aspects that will bring about the quantum jump in revenues that is presently, only a distant dream.


Islamabad, November 20.