This is apropos a Business Recorder editorial “Tax potential” carried by the newspaper on Wednesday in which the newspaper has argued among other things that the “tax revenue target agreed by Pakistan’s economic team leaders with the IMF for the ongoing year is 5.1 trillion rupees as noted in the April 2020 documents relating to the Rapid Financing Instrument and the slight scaling down to 4.96 trillion rupees in the budget presented to parliament on 12 June 2020. There is speculation that the delay in reaching the second staff-level agreement is due to the Fund’s insistence on an FBR growth target (as well as a raise in tariffs) with severe political and economic implications (as it may further choke off economic activity) for the government. At this stage throwing a spanner in the negotiation works could have disastrous consequences for the government’s ability to convince the Fund of its point of view that, in turn, would have serious implications on maintaining a sustainable foreign exchange reserve position.”
Whatever the newspaper has stated is nothing but truth. But the newspaper, which essentially deals with news and comments on economics and finance, ought to have explained to its readers how a higher tax collection can be achieved in periods of lower economic growth. In my view, achieving this task is extremely difficult if not impossible. Insofar as the issue of ‘tax potential’ is concerned, it will never translate into reality mainly because of the fact that ours is a ‘tax evasive’ culture or a culture where paying due taxes is considered a sign of weakness.
HAMID KHAN (LAHORE)
Copyright Business Recorder, 2020