Increasing Pakistan's tax net: Way forward

"I do not want to increase taxes, I just want taxes to be paid honestly". These words of Narendra Modi can be best utilized and are true depiction of the way forward of increasing Pakistan’s net tax.

But first, let shed an ink on the importance of the tax collection system. Taxes raise the standard of living and foster economic growth in the country. Government brings taxes to the fore to provide a conducive environment for business activities in the country and spend this money on the welfare of the people including education, health, and employment.

However, at current times, Pakistan is facing the brunt of a severe economic crisis, and the decreasing tax base is one of the reasons behind this grim situation. 

The question is why Pakistan’s tax net is eminently low. Some reasons behind it are the weak enforcement mechanism of tax collection, illicit tobacco trade and weak monitoring on the minimum retail price of cigarettes, financially weak local urban government framework, and the ill difference between taxpayers and nontax payers in the country.

Well considering such a horrific situation, the incumbent government is working to put a halt to this havoc. The government has taken some pragmatic measures including enforcement of amnesty tax scheme, tax amnesty in construction-related works, provision of point of sales systems to a large number of entities, and taking a loan from the world bank to bring tax reforms in the country.

Yet, a lot of work has to be done to increase the tax net of the country. So, the way forward is bolstering the imposition system of tax collection, stringent control on illegal tobacco trade, proper execution of point of sales system, financially empower the local urban government to collect more taxes from the big cities, and establishing a data warehouse house by linking all country’s entities to one system.

However, by taking such concrete steps, Pakistan’s tax cloud will be increased, and it pushes the country to the path of prosperity. As the axiom goes, after every night goes comes a glorious morning.

AUTHOR: UMAR KHAWAJA