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Replacing GST with VAT

July 01, 2013

Living in Switzerland, thousands of miles away from Pakistan, I had hoped for a real change in the fiscal ways of the new government. In all civilised democracies we notice that the most unpopular but good for the country decisions are taken and implemented immediately after the elections.

In Pakistan the recent budget did not come at par with the decisions of a government that had reversed a failed political party and an ailing economy.

On the contrary it looked like the work of a bureaucrat who did a hasty 'copy paste' job in a week and handed it to the finance minister.

Economists and analysts had expected a much different and radical approach. To be brief, two aspects of fiscal policy that need immediate attention are (a) taxation of agriculture income and (b) replacement of General Sales Tax (GST) by the Value Added Tax that is already practised by innumerable countries and democracies.

Rumour also has it that the FBI has a list of persons, entities that can be brought into the tax net if authority is given to it.

To say that agriculture is the provincial subject is like throwing dust in the eyes of the public. It is the agriculture income like any other income which has to be made a part of the income tax.

VAT was paddled by a previous finance minister in vain.

If it is implemented it will provide the much needed tool of accounting the economy. This should be seriously considered in spite of the opposition by the tax evaders of the country. Furthermore, urgent legislation is required to chase the tax evaders. I also heard the National Assembly speech of Imran Khan quoting Switzerland many times. Justice is essential but it cannot be brought to people in its true sense without bringing about a balance between resources and the demand for them.

Resources do not mean those that are unexploited or are hidden underground. Resources mean those which are available for usage. These resources have become limited and scarce. Unless we control the demand for them, balance cannot be achieved. For that a net reduction in the growth of population is essential.

Switzerland has a very low growth rate of population. Family planning should be promoted as part of the government policy without caring about the noise made by the religious parties and ignorant religious elements. We expect more from enlightened persons like Imran Khan in this regard.

We must focus on the pressing issue of reducing a growing population.