Pakistan has one of the world’s worst income tax collection ratios, with only 0.5pc of the entire population registered as paying income tax. This year also the FBR failed to achieve a tax collection target that was revised downward three times!

However, this problem can be turned into an opportunity. The FBR’s failure has also highlighted the fact that the government does not rely on income tax revenue for its budget.

The concept of income tax was introduced in the subcontinent by the British. Muslim rulers between the seventh and 12th centuries made many advances in finance techniques and introduced the world to banking services. But they never used income tax as a revenue head for the government.

Muslim and Western economists both agree that taxes should only be collected on imports, consumption of natural resources and luxury items, low-effort incomes while natural resources are God given and they should be taxed at production and consumption level.

Collecting income tax on salaries means taxing the poorest class of the society and taxing fixed-income families.

Engr Shahryar Khan Baseer

Peshawar

Published in Dawn, July 28th, 2014