This is apropos a Business Recorder op-ed “FBR: dismal income tax collection” carried by the newspaper on Nov 11, 2022. The writers, Huzaima Bukhari, Dr Ikramul Haq and Abdul Rauf Shakoori, have presented a highly informed perspective on the profound flaws in our taxation system. They have argued, among other things, that “If the existing tax gap is bridged, our tax collection at national level can reach Rs 13 trillion (direct taxes Rs 7 trillion and indirect Rs 6 trillion), which would change the entire fiscal scene.”
In my view, one of the weaknesses of our taxation system is the historical or traditional absence of any federal government tax on agricultural income tax, although agriculture is the foremost sector of Pakistan’s economy.
Agriculture tax falls under the provinces and no province is interested in expanding the agri tax base mainly because of the fact that no major political party wants to irk farmers who constitute a valuable vote bank. A parallel black economy, too, is a major reason behind lower tax collection or the widening tax gap.
Nasir Husain (Karachi)
Copyright Business Recorder, 2022
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