Imposition of VAT opposed, wealth tax justified
RAWALPINDI: Speaking at the Jang Economic Session, experts were of the opinion that the country’s’ leadership neither pays taxes nor motivates the masses towards this cause.
Taking part in the session in connection with the new book of economic expert Mahmood Mirza, ‘Social Review of the Tax System’, they said rich people cleared their obligations just on paper but the poor masses exactly practiced it. They were of the view that our tax system was cruel and unjustifiable and needed extensive reforms, including equitable recoveries from defaulters irrespective of their status in the society.
The speakers stressed to avoid enforcement of the Value Added Tax (VAT) in the country, as it would be against the national interest and norms of justice. Tax reforms have become inevitable.
The speakers quoted the World Bank as revealing that taxes from Rs 796 billion to Rs 800 billion annually were not paid in Pakistan and 68% of the tax recoveries were drawn from the public sector and foreign entrepreneurs.
In addition to the author, the speakers of the session, hosted by Sikandar Hamid Lodhi, included former director general Large Taxpayers Unit Pir Hussain Ahmad Sherazi, former president Institute of Chartered Accountants Imran Afzal and Advocate Supreme Court Mian Ashiq Hussain.
Mahmood Mirza said the tax burden had been shifted to the common man by enforcing it on commodities. While claiming to convert the country into a welfare state, the leadership fails to explain as to where the resources shall be made available.
They neither pay taxes nor are in a position to recover it from the society. He said that welfare states were developed countries where ratio to the national production was about 40%, whereas in our case it was less than 10%. He ruled out overcoming the budget deficit without recovering taxes.
He pointed out that neither agriculture nor capital gain tax was levied in the budget, which gives the impression that the government was not interested in expanding the tax net.
He called for plugging tax evasion, expanding the tax net and documenting the economy besides the government’s access to the record of all property and bank accounts. Mirza said out of 32,000 companies, a handful of companies were paying taxes. Most of the revenue is drawn from multinational and petroleum sectors. He called for reforms in the society and introduction of equitable taxation prior to introducing the tax reforms.
Speaking on the occasion, Hussain Ahmad Sherazi said the increase in tax net could not be made due to the prolonged Army rule. Imran Afzal said that tax payment across the world was carried out due to fear but in our case contacts had made the law vulnerable.
The influential persons normally guide defaulters and help them come out of the net safe and sound. He said that Pakistan is a country where the president, prime minister and legislators do not pay taxes in contrast to the Islamic teachings that ask rulers to become a role model for the society.
Mian Ashiq Hussain claimed that income tax had been transformed into sales tax and all taxes were collected from the poor people. The non-documented economy is another problem for the taxation system. He defended the right of the provincial governments over taxes on services.