Islamabad - In Pakistan, annually, financial loss worth Rs500 billion is incurred on the national exchequer through Statutory Regulatory Orders (SROs) exempting the rich and the powerful from paying taxes. Last year alone 80 SROs were issued despite the fact that tax imposition or exemption is the sole prerogative of the legislature (Parliament). 

This was said by renowned economist Dr Ikramul Haq at a policy dialogue titled “Pre-Budge Policy Dialogue: Equitable Tax Regime in Pakistan” jointly organized by TheNetwork for Consumer Protection.

The pre-budget dialogue was also addressed by former Chairman and Secretary General Ministry of Finance Abdullah Yousuf, Chairman Sindh Revenue Board, Tashfeen K Niaz, and Chairman PIDE Dr Asad Zaman. Sharing the findings of a recent study conducted by him on the pro-rich regressive tax system of Pakistan and its devastating impact on the country’s economy, Dr Ikram said Pakistan needed judicious and equitable tax system because the prevailing system is causing inequality in society and supporting those who manage to evade taxes in one way or the other.

According to him, the SRO culture should come to an end as it does not exist even in India or other neighbouring countries. The SROs serve to exempt politicians, members of parliament, civil military bureaucracy from paying taxes which is unjust, unfair and discriminatory, said Dr Ikram.  The money lost thus can otherwise be utilized on education, health and social sector. It is because of these SROs, FBR has never been able to meet its targets, he said. It is because of this discrepancy we have an increasing gap between the rich and the poor and the difference is rising with every passing day. “People who are already in tax net are squeezed further.

Progressive taxation, he said, is envisaged in Article 3 of the Constitution of Pakistan and poverty is directly linked with inequitable distribution of income and wealth, reveals his study.

Abdullah Yousuf was of the view the federal government was facing fiscal deficit and mounting trade deficit. Fiscal deficit is around Rs 1.9 trillion, debt servicing, lack of tax documentation  and trade deficit as our exports are relatively poor as compared to the quality of imports. The government should draw a clear line as who should pay and who should not pay.

Tashfeen K Niaz chief of Sindh Board of Revenue said provinces and the provincial tax authorities were doing much better than the FBR. Giving example of his own province, he said after the devolution of powers under the 18th amendment Sindh was empowered to collect taxes in different heads and last year it earned Rs333 million as compared to FBR’s Rs73 million the previous year. He said FBR lacked certain direction and kept changing policies which ultimately took toll on the province’s revenue.