'Need for new income tax law'

This is apropos a Business Recorder op-ed "Need for new income tax law" carried by the newspaper yesterday. The writers, Huzaima Bukhari and Dr Ikramul Haq, have highlighted a very key aspect of taxation by arguing that "The administration of a tax system is highly complex. No doubt, a proper bureaucratic input is vital for making the system successful, but it is equally necessary to take all the stakeholders on board and laws are made and implemented through consultation and consensus rather than by means of irrational policies and illogical measures."
It is, therefore, important to make it clear that developing economies, including Pakistan's, hardly collect taxes between 08 percent to 20 percent of GDP. One of the key reasons behind lower tax collection is existence of a strong informal sector in such economies. No meaningful change can be brought about in either taxation system or administration of taxation system without netting the informal sector into the taxation mainstream.