Bad tax policies have historically curbed economic growth and development. Rather than carefully developing such policies with an adequate legal basis, the hunger for revenue leads to more and more tax measures being added without considering their consequences for the economy. Recognizing the weakness of tax administration, withholding income taxes have been applied to all manner of transactions such as utility bills, school fees, bank transactions, and telephone bills. Businesses, utilities, banks, and even schools have become tax collection agencies, adding to their costs of doing business.
Unfortunately, in Pakistan, successive governments have used taxes as a tool to extort as much as possible from the masses for their own comforts and luxuries. By resorting to repressive tax laws, they have been making the rich richer and the poor poorer, stifling growth, and discouraging business transactions through complex laws and cumbersome procedures. Our financial managers are caught in a dilemma. On one hand, there is mounting pressure to reduce the fiscal deficit through improved collections, and on the other, they are not ready to abolish numerous tax exemptions and concessions available to the rich and powerful. In our fiscal woes, there is also criminal culpability of IMF bosses who pressure our economic managers to follow their faulty prescriptions. They advocate for more regressive taxes and do not care if the federal government raises the sales tax rate, knowing that such actions burden the poor and constitute open violations of Articles 77 and 162 of the Constitution of Pakistan. In their countries, they talk about the rule of law, but in Pakistan, they ignore our supreme law.
Over time, our tax system has become rotten, oppressive, unjust, and target-oriented. We should liberate ourselves from the reform game of the World Bank and other foreign donors. The tax policies implemented at the behest of foreign donors have led to abject poverty for the vast majority of people. These policies are not making us self-reliant but are destroying our industry and businesses. If we manage to formulate a rational tax policy through public debate and the parliamentary process, and implement it through consensus rather than coercive measures, there is every possibility of getting rid of the World Bank and IMF in a short span of time.
SHAFI AHMED KHOWAJA,
Hyderabad.