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Following the rollout of Alif Ailaan – an evidence-backed campaign that seeks to put education at the front and centre of public discourse in Pakistan – UK’s Department for International Development is now reportedly planning to support a tax reform project expected to be implemented along the lines of their Alif Ailaan project.
This is going to be a positive development. Tax collection is a major issue for Pakistan and much ink has been spilled to highlight the nature and pervasiveness of the problem, as well as its consequences. However, it’s unfortunate that in popular discourse the issue mostly involves solely putting Pakistan’s political and landed elite on the crucifix. In contrast, little or no pressure is built on the vast array of businesses out of the tax net, and the responsibilities of the society at large.
An evidence-backed campaign to build a broad-based discourse on taxation reform would therefore be timely and much needed. This column claims no expertise on devising a full-fledged tax awareness programme, but as users and producers of economic/financial research, it would be fruitful if the following elements are included in the research component of the campaign.
A business sector-wise analysis of how many SECP-registered firms in each sector file tax returns, and a comparative distribution and incidence of taxation within each sector would be a good place to start. An elementary inquiry along those lines has already been done and published by BR Research, using FBR’s Tax Directory data, (See: BR Research column: The corporate tax affair(s), May 6, 2014) and it would be interesting to see a sector-wise analysis on the same as a follow up.
A similar exercise that lays out city-wise registered firms and the taxes they pay would also be beneficial. On a related note, even more fruitful would be district-wise tax collection which can then be put into the context of district-wise current and development spending. The exercise should ideally be done at both provincial and federal levels of taxation and then contrasted with both levels of government spending.
Third area could be a nationwide (perhaps across major cities as a start) perception survey of why individuals and businesses do not pay taxes along with the problems; what are their overall views on Pakistan’s taxation system; and the problems they face in the paying taxes.
All of these analytics could then be mapped via an interactive online dashboard – such as www.mdg.undp.org.pk/ and www.alifailaan.pk/district_education_rankings - to raise awareness and unearth the mystery that usually shrouds taxation in Pakistan. Interactive online dashboards can be a pretty useful tool to build debate – especially if electronic media organisations start building their shows around it. Hopefully, those devising the project will consider these suggestions.

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