PARTLY FACETIOUS: There is a need for structural changes in taxation system

“Chairman FBR urged the Senate body to abolish the Seventh Schedule of the Income Tax Ordinance…”

“Which incidentally dates back to 2001.”

“Hey, that ordinance has been amended from time to time and like other countries remains largely valid…”

“Excuse me, but there is a need for structural change in our taxes – our reliance on withholding taxes that are levied in the sales tax mode, which you must know is an indirect tax whose incidence on the poor is greater than on the rich, but credited dishonestly by the FBR under direct tax collections…”

“They are kinda easy to collect – you appoint withholding agents from the private sector, increase their work load don’t pay them a penny, and they collect it…”

“Look at the glass as half full: you collect more while you don’t burden your staff and…”

“The private sector is reeling, let me cite the Finance Division’s data on large scale manufacturing sector: negative 1.4 percent in the outgoing year, negative under 0.5 percent last year and this negativity…”

“The glass is half full, my friend.”

“Right besides the Chairman has claimed that enforcement measures have generated a close to 380 billion rupees and…”

“But the successful enforcements he mentioned were from indirect taxes, excise duty on….on was it sugar or cigarettes? And that tax is passed onto the consumers anyway, so…”

“Anyway one question, if the seventh schedule is abolished would the banks be as amenable to lending around 1.2 trillion rupees to the poorly performing power sector - money borrowed to retire the circular debt?”

“If you recall, the head of our premier intelligence agency did, how can I put it, convince the Independent Power Producers to agree to the renegotiations and….”

“I am aware of that, my question is if the banks do not get special treatment then would they agree to lending to a sector where they are over exposed and…”

“I am not sure, but why doesn’t the Chairman consider generating revenue from some other source. India for example, generates huge amounts from its stock market activities…”

“Hey, our stock markets are used as a yardstick to assess government performance.”

“But the bulk of our population, the poor, the lower middle and middle income earners do not invest in the stock market…”

“Shut up silly. You don’t know the macro picture.”

“I stand corrected.”

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