Tax structure needs to be overhauled: Kaiser Bengali

Dr Kaiser Bengali, consultant to Chief Minister Balochistan said on Thursday that Pakistan's tax structure needs to be overhauled and government should immediately undertake land reforms but moved ahead according to land structure in all four provinces of the country.
Addressing at the launching ceremony of the report released by OXFAM on inequality here on Thursday, Dr Kaiser Bengali said Pakistan was not facing resource constraints as they could overcome illiteracy in five years and could handle hunger in one year by devising innovative ways such as establishing public private partnership but there was need to set right direction for the country.
He called upon the government to undertake land reforms but moved ahead differently in all four provinces. The country's tax structure needs to be overhauled and pointed out that the agriculture sector was contributing just 0.5 percent relative to its generated income, services sector less than 5 percent and manufacturing sector 29 percent. "So we are killing jobs and inequality is bound to rise," he added.
According to the report of the OXFAM, in rural Pakistan the extremely poor had to pay bribes to officials 20 percent of the time, whereas for the non-poor this figure was just 4.3 percent.
For the poorest 20 percent of families in Pakistan, sending all children to Low-Fee Private Schools' (LFPS) would cost approximately 127 percent of each household's income.
The report says that researchers have shown that, across the 21 countries for which there is data, there is a strong correlation between extreme inequality and low social mobility.
"If you are born poor in a highly unequal country you will most probably die poor, and your children and grandchildren will be poor too. In Pakistan, for instance, a boy born in a rural area to a father from the poorest 20 percent of the population has only a 1.9 percent chance of ever moving to the richest 20 percent. In the USA, nearly half of all children born to low-income parents will become low-income adults."
Elites, in rich and poor countries alike, use their heightened political influence to have government favours - including tax exemptions, sweetheart contracts, land concessions and subsidies - while blocking policies that strengthen the rights of the many. In Pakistan, the average net-worth of parliamentarians is $900,000, yet few of them pay taxes. This undermines investment in sectors, such as education, healthcare and small-scale agriculture, which can play a vital role in reducing inequality and poverty.
When politics and policy making are influenced by elites and corporations, they serve their economic interests instead of those of society as a whole. This is as true in the USA as it is in Pakistan and Mexico, and has led to government policies and actions that benefit the few at the expense of the many, further widening the inequality gap.
In Pakistan, social mobility is a distant dream. A boy born to a father from the poorest 20 percent of the population has a 6.5 percent chance of moving up to the wealthiest 20 percent of the population.
The second major driver of rapidly rising economic inequality is the excessive influence over politics, policy, institutions and the public debate, which elites are able to employ to ensure outcomes that reflect their narrow interests rather than the interests of society at large. This has all too often led to governments failing their citizens, whether over financial regulation in the USA or tax rates in Pakistan.
In Pakistan, the average net worth of a parliamentarian is $900,000, yet few of them pay taxes. Instead, elites in parliament exploit their positions to strengthen tax loopholes. The dearth of tax revenue limits government investment in sectors like education and healthcare that could help reduce inequality, and keeps the country dependent on international aid. This prevents the growth of a diverse and strong economy, while perpetuating economic and political inequalities, it added.