LAHORE: Leading tax expert Ashfaq Tola has urged the government to streamline its taxation system to attain a tax target worth of Rs7.440 trillion for the next fiscal year. The government needs to correct the fractured system of taxation and should remedy the inequality of taxes in Pakistan, he added.
Talking to Business Recorder, he said, tough policy measures is the need of the hour which included limiting the size of primary deficit in the budget, effective tax reforms to broaden the tax base, structural reforms in the commodity producing sectors, working on comparative trade policies to enhance national export, reduction in the interest rate to boost economic activity and limit the debt servicing, and managing external sector properly to avoid rampant devaluation of domestic currency.
According to him, Pakistan economic targets for upcoming fiscal year have been formulated in a politically constrained environment while under pressure from the IMF. Given the continuing negative developments in the global economy, especially volatility in oil market and other essential commodity prices, he is sure that the IMF would show some understanding and support Pakistan at a time when the country is in a very fragile economic situation, he stressed.
Tola has supported the government’s decision of implementing “Super Tax” (also being referred to as the “Poverty Alleviation Tax”), saying that it would not impact directly the poorer class nor will it impact inflation as it is a one-time direct tax imposed on the income of high net-worth individuals and companies that have earned a sizeable income for the Tax Year 2022. Therefore, it is a suitable way to enhance income tax collection share in total tax revenues and to provide much relief to the fiscal side of the economy and eventually to the poorer masses, he said.
Following the agreement with the IMF, he said, the government has now agreed to gradually increase petroleum levy by 50 rupees and reinstate income bracket of PKR 100,000 into tax slabs.
It may be noted that the IMF has already sent its Memorandum of Economic and Financial Policies (MEFP) draft to Pakistan for the combine 7th and 8th review of the $6 billion IMF Programme which was halted due to the deviation from commitments in policies by the previous government.
Copyright Business Recorder, 2022