Fiscal trajectory: Expert underscores role of taxation

PESHAWAR: Muhammad Umair Zeb, a leading tax expert has underscored the pivotal role of taxation in shaping the nation’s fiscal trajectory.

He said in a statement here that in the ever-evolving saga of Pakistan’s economic journey, the vexing question of taxation looms large, beckoning a nuanced exploration of the nation’s fiscal future.

Despite whispers of tax woes resonating through the streets, Pakistan finds itself grappling with a tax-to-GDP ratio steadfastly anchored at a modest 10.4% for over two decades, even after the GDP recalibration of 2022.

This figure, trailing behind its global counterparts, signals a pressing need for a more robust revenue framework to fuel the nation’s aspirations.

A significant segment of Pakistan’s economic activity remains shrouded within the shadows of the undocumented sector, casting a cloak over an estimated 36% of GDP, according to the World Bank.

Within the formal tax arena, a select few shoulder the weight of the nation’s tax burden, with a mere 1.86% of filers bearing the brunt of income tax obligations.

Muhammad Umair Zeb highlighted Pakistan’s struggle to instil a palpable fear of detection and the efficacy of enforcement. This fosters a culture of non-compliance, undermining revenue generation efforts.

Zeb emphasized the undeniable imperative of tax reform in Pakistan. Through concerted efforts to enhance enforcement mechanisms and capitalize on technological advancements, Pakistan can navigate the delicate balance between fiscal sustainability and social equity.

Efforts to strengthen enforcement mechanisms should prioritize detecting and penalizing high-income individuals who exploit loopholes to evade their tax obligations.

Copyright Business Recorder, 2024