Alert Sign Dear reader, online ads enable us to deliver the journalism you value. Please support us by taking a moment to turn off Adblock on

Alert Sign Dear reader, please upgrade to the latest version of IE to have a better reading experience


Unjust taxation policy

September 09, 2012


THE financial team has failed to demonstrate determination to uproot the ills of economy.

The deteriorating economic position can be attributed to multiple factors of mismanaged governance, yet the major cause is a lack of framing a balanced and equitable financial policy.

Explicitly, analysts have time and again reminded the policymakers about the pitfalls of the state of taxation system.

The system is violating constitutional norms of social justice, equality and transparency. It has managed to penetrate so deeply in our society that no one at the helm is talking about structural overhauling.

Meanwhile, some two per cent have accumulated almost entire resources, yet their share in taxation is as low as their population. In this way, almost entire burden of collection and generation of taxes rests on small traders and employees. While, those who have managed to include themselves in the privileged class, they have been further facilitated with a number of exemption and concession schemes.

This privileged class reportedly includes officials from the military, civil bureaucracy, landlords, business tycoons and media owners. Meaning, thereby, these mighty rulers have become sacred cows, and policymakers aren’t even entitled to touch them.

This means the poor will continue to bleed under this dismal scenario.

However, the system can still be taken upside down (from regressive to progressive) and substantially rectified. Rulers have to realise that the democratic transition does not come to an end after holding free and fair elections. Instead, it is only a single and initial step and that also on the part of voters, who help to make the election process productive.

It is then the chosen rulers who are duty-bound to nourish the system of justice and equity.

They are expected to ensure the end of poverty, illiteracy and unemployment, bring societal harmony and make society corruption-free.

Also, they must generate revenue mainly through progressive and direct taxes and minimise collections via indirect taxes. It brings all social elements on an equal footing where everyone contributes to national exchequer in proportion to one’s respective source of income and, more importantly, in such a system every class, howsoever mighty that may be, is made responsible for contributing to the national kitty.

On the contrary, these democrats seem to have refrained from asserting their authority. Even, they have apparently surrendered their right of policymaking before the bureaucrats. These powerful bureaucrats share no opinion and impose their will in the form of finance bill each year before the parliament.

To make matters worse, the bill is easily passed without holding any meaningful debate and only with some minor amendments here and there. In such a scenario, no one can expect a policy based on national interests and the things will keep deteriorating.

Bureaucrats have never been serious about remedying the grievances of the people. The country is in debt of grim scenario like large fiscal deficit, ballooning debt servicing, enlargement of government expenditure, staggering tax-to-GDP ratio, tax evasion and concession, inadequate infrastructural development and the list goes on.

In addition, we witness the provision of tax amenities on black money for speculative transactions of stock exchange.

If the government was serious enough about taking stringent measures by documenting the economy, imposing tax on the rich, it would have easily added billions to national exchequer and raised the tax-to-GDP ratio to respectable double digits.

With this, it could sufficiently narrow down fiscal deficit and reduce reliance on loans. But the disappointing efforts are only taking the country to another marathon-like loan procuring exercise.

Similarly, with elections are approaching before next budget-making, the government will remain least bothered about rectifying any err to avoid any backlash from the powerful lobby.

Therefore, all political parties must come forward and draw out a strategy and make their determination public that they will not only bring policymaking under their own control but also impose taxes on all exempted classes.

MUHAMMAD AZAM SHAIKH General Secretary, Tax Bar Association, Larkana