EDITORIAL: The tailwind is with them — the economy is stabilising, elections are three years away, and the government is firmly in control. The timing could not be better to expand the tax base and start trimming the government’s fat. But, instead, it is almost more of the same. There are low-hanging fruits — if the FBR has any real interest in them.
One such area is livestock, which accounts for more than half of the agriculture sector and as per the advice of the attorney general clearly falls within the federal government’s domain to tax its income and also impose tax on its sale.
The FBR has opposed the Punjab government’s attempt to legislate taxation on income from livestock, yet there is nothing to exhibit the federal government’s willingness to tax income from livestock trade in this budget. It is important to note that livestock is supposedly growing at 4.7 percent, while major crops have declined by 13.5 percent.
Some animals were sold for millions of rupees a head during the recent Eidul Azha and all transactions occurred in cash — with no sales tax and no trail for income tax. The government continues to tax poultry and treats the processed milk industry like a stepchild, yet red meat — something the poor only get to eat on Eid — remains untouched. The irony is clear: the government taxes cheap sources of protein and fat, while steaks and mutton chops go tax-free.
This reflects the absence of a tax policy aligned with social needs or equity. Instead, taxes are applied where collection is easiest. There are other examples that contradict the government’s stated policy goals. Take the case of taxing online marketplace transactions. The policy incentivizes cash on delivery (CoD). For example, if you buy electronics worth Rs2,000 online and pay digitally, the tax is Rs400; if you choose CoD, it is just Rs52.5. This stands in stark contrast to provincial incentives. For instance, in Punjab, GST is 5 percent for card payments and 16 percent for cash.
Additionally, e-commerce platforms are now expected to collect taxes on behalf of the vendors, who must be registered. The finance minister claimed that online vendors have an unfair advantage over traditional retailers, as if brick-and-mortar retailers are paying their fair share of taxes.
In reality, the objective is not fairness but revenue — and it comes at the cost of a nascent e-commerce industry. Meanwhile, the government pretends these steps are good for the digital economy, even as they further entrench the cash economy with higher taxes on cash withdrawals.
There are other glaring examples as well. Taxes are being reduced in some areas and increased in others — not to steer the economy or broaden the tax net but simply to extract maximum revenue from wherever it is easiest and least politically damaging.
The FBR operates on a “two-plus-two” mindset; it does not think beyond that. On paper, taxes on salaries and super tax have been slashed — not to revive investment or stop the so-called brain drain, but to incentivize speculative investment in real estate and stocks, while discouraging formal savings. The real objective seems to be to boost market sentiment and sweep meaningful reforms under the rug.
Copyright Business Recorder, 2025
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