Tax experts have expressed doubt over the government ability to tax the wealthier, bring traders in the tax net and avoid retrogressive measures like advance tax on industry and let it grow and offer jobs to the unemployed youth. They said the fiscal policymakers tailor the revenue estimates in line with the expenditure that the government has to finance throughout the fiscal year, they added.
It may be noted that the fiscal planners have been claiming of phenomenal revenue growth since 2013 point out that despite 3 to 4 percent GDP growth. They have pointed out that they were able to take the revenue collection from Rs 1.8 trillion in 2013 to Rs 3.2 trillion in 2015-16.
But the tax experts are of the view that the claims of fiscal planners do not match with the factual position, as they have enhanced the standard rate of Sales Tax from 15 percent 17 percent to non-payment of due Sales Tax, broaden the scheme of withholding tax on the sales tax side and enhanced the sales tax rate on POL especially on diesel which went up as much as 48 percent against the standard rate of 17 percent.
On the income tax side, they said they have imposed withholding taxes of assorted kinds by almost 50 percent, created the slabs of filers and non-filers, introduced withholding of due income tax refunds taking huge advances from corporate sectors and imposed withholding tax on cash withdrawal.
On the Customs side, they added, at least 40 tariff lines were made dutiable which were earlier duty free, imposed one percent customs duty on all items which were not dutiable and enhanced the customs rate from 5 to 6 percent. According to tax experts, the impact of such numerable tax measures obviously resulted in more than Rs 1.4 trillion, which is not the right way to collect the revenue because it lacks the prime objective of plugging tax-gaps.
One cannot deny the fact that the government needs revenue to run the state machinery but another economist has pointed out that the state machinery is being run through domestic as well as massive loans under the CPEC package. In case the benefit of Rs 1.4 trillion generated revenue extra has been spent on development of infrastructure, the tax planers have pointed out that the motorways, flyovers and metro buses are the prime example of developing infrastructure.
One could agree with this viewpoint but then this is the hardware of infrastructure whereas all success stories focused on initially developing software. Pointing out further, it is pertinent to mention that software of economy stems from harnessing the capability of population per se living on poverty line mainly in rural areas as well as in interior of Sindh and Balochistan.
They said 72 percent of the revenue is collected as indirect taxes/withholding taxes and their incidence is always passed one to the end consumer. Another impact of these measures is the closure of industry that leads to deprivation of people from whatever opportunities were available for doing some job.
They said the question is whether this is the priority of the government to invest in human development sectors or continue to play with visible economic measures to attract the voters. The government may give some priority to poor people and make some genuine efforts for taxing the informal economy and taxing the income rather collecting the taxes from poor people by way of further increasing the rates of withholding taxes, they added.
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