Pakistan is one of the countries in the world with the lowest tax-to-GDP ratio standing below 10 percent for many decades except for a few years. The tax collection is far below the potential of the economy due to weakness in the machinery of the revenue collection authority but it also signifies the prevailing poor tax culture in the country in which people hate to pay their taxes to the government.

The low collection of taxes, direct and indirect, is the core issue for our ailing economy. The country cannot progress towards economic development and prosperity without addressing it properly.

Numerous think tanks estimated that the country needs to enhance its tax-to-GDP ratio up to 15 percent gradually, which is a herculean but a doable task that could be accomplished in phases within three years of sustainable efforts.

Improvement in tax collection could be carried out with consistent efficiency in the system of revenue collection and promoting the culture of tax wherein people voluntarily pay their due share of taxes themselves as responsible citizens.

The new taxpayers’ directory unveiled that the situation of tax collection has been very disappointing with no significant improvement in this area. As many as 177 lawmakers have been identified who did not pay a single penny on the account of taxes even from the monthly income they draw from taxpayers’ money.

It is shocking to know that a CM of the biggest province Usman Buzdar, and federal ministers like Faisal Vawda and Zartaj Gul were included in the list.

To make the case worse, a majority of the lawmakers did not submit the taxes as per the assets they declared and their earning from the various sources. It is a highly embarrassing situation for the political parties having these parliamentarians although it is their prime responsibility to force them to abide by a very crucial obligation.

These lawmakers, including MNAs, senators, MPAs should be declared defaulters and unseated immediately till they file their returns and submit their taxes.

Of course, the trend discourages a layman including salaried persons, entrepreneurs and businessmen from being loyal and generous to the state of Pakistan when a class of the representatives does not bother to file their tax returns.

The tax culture in Pakistan cannot be promoted unless our parliamentarians contribute to tax collection honestly from all available income sources and assets; whatever they own. It is crucial because if the change does not occur in the parliament, it will simply not translate in the whole country.

The second most essential aspect to promote tax culture is to spend the taxpayers’ money on socio-economic prosperity and welfare of the masses. This is how developed and progressing countries are scaling up their tax-to-GDP ratio up to 50 percent.

This spending is not merely a simple phenomenon of paying back to the citizens but it is investment, in fact, which further multiplies monetary benefits in the economy and will also generate more revenues for the national kitty.

The Pakistani nation is surprisingly generous. It pays billions of rupees every year to underprivileged, deserving and poor fellow citizens. Yet, the GDP to philanthropy ratio of the country stands after developed countries like the USA, New Zealand, Canada and others. Nearly 1 percent of GDP is spent on charity by 98 percent of Pakistanis according to a report. Various charitable institutions backed by resident and overseas Pakistanis are working for various noble causes to support poor across the country.

So if people happily contribute to charitable activities, why not contribute to nation building; once trust is built by the government over its efficiency? Mega cities like Karachi which generate the highest taxes in the country should be given priority for the investments, which ultimately will thrive businesses from the macro to micro level and then return back taxes to the government.

The present government has taken a few commendable initiatives to enhance tax collection countrywide and secured notable successes in this regard. Highly-paid professionals including doctors, engineers, teachers were brought into the tax net. Traders of various shopping centres and retail shops were also taxed in the metropolis. Hence, the government collected a handsome amount of Rs50 billion from above the target of financial year 2019-20 despite the slowdown of the economy following the COVID-19 outbreak.

The introduction of a mobile application and the use of social media for awareness and filing tax returns seems a very good approach for the government. However, the government should immediately accomplish its task to separate the wings of policy and mechanism of the Federal Board of Revenue.

The digitisation and documentation of the economy is also a comprehensive step that will support the government in collecting taxes. Overall if the economy is set to revive, additional tax revenues could be generated on a sustainable basis with a free hand to taxmen, tapping the widespread untaxed areas, release of timely refunds, and improving the tax culture.

If we, as a nation, are capable of enhancing the tax-to-GDP ratio at 15 percent, we will not need to borrow money from external sources and the socio-economic woes could be addressed effectively in the country.