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LAHORE: Renowned tax expert Dr Ikram Ul Haq has termed the budget 2021-22 regressive and anti-growth as usual, saying that no innovation in taxation has been introduced.

He said Pakistan has a complex tax system of over 70 unique taxes and at least 37 government agencies administer these taxes, yet not collecting enough and pushing the country into a deeper debt trap. The PTI government has made no effort to reform the fragmented and highly complex tax system, remove policy distortions and reduce the fiscal deficit, he added.

According to him, unfair taxation is the root cause of our multiple socio-economic ills, resulting in an inequitable distribution of resources. The Federal Board of Revenue (FBR) as it exists today is incapable of tapping real tax potential, as, in addition to capacity issues, those in power and other vested interests do not allow it to work freely.

He said Pakistan needs a National Tax Agency (NTA) or Pakistan Revenue Board (PRB), which should not only be responsible for the collection of taxes for federal, provincial and local governments but also to administer various social and economic benefits and incentive programmes, otherwise, tax compliance will remain a distant dream. People must get free education, quality healthcare, decent housing/transport plus social security schemes, such as, disability allowance, old-age benefits, income support, child support, pension, just to mention a few, in lieu of paying fair taxes, he added.

He said the balancing of books through more loans to bridge fiscal deficit is also evident from this budget, which means more debt servicing, and no reduction in non-development expenditure.

Regarding the tax target, he termed it as usual and based on clichés to use technology to broaden the tax base, which is easier said than done, as there are no taxes on the rich to narrow fiscal deficit without passing on the burden of indirect taxes on the common citizens.

President Friends of Economic Reforms in Pakistan Kashif Anwar termed the budget as positive focusing on documentation with control and checks. He said the business community was expecting a reduction in turnover tax up to 0.5 percent. He further expressed the hope that a special policy for small and medium enterprises (SMEs) would convince non-filers to opt for documentation of their businesses. However, he has objected to the powers to the FBR personnel to arrest and launch criminal proceedings against those misdeclaring their sales under point of sales integration, saying that it would open up a door of corruption.

Similarly, power sector expert Tahir Basharat Cheema said there are no allocations for the power sector, and all of these barring one or two outlays (except the amount for NJHPP), are loans from the World Bank, Asian Development Bank and other multilateral debt agreements.

Javed Ahmed, another tax expert, said removal of block taxation in property tax and limiting block tax on non-transferable property was opting for the rental income to be taxed as a separate block previously. But now the proposal is to revert back to the old tried and tested system of normal tax regime, he added. According to him, it would provide clarity both for the department and the taxpayers as there would be no option now and a straight forward normal taxation would be enforced.

Copyright Business Recorder, 2021


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