Pakistan’s tax system is extremely unfair, causing poverty. Economic stability is impossible without increasing the tax base. An undocumented economy can bankrupt the country.



Chairman of National Business Group Pakistan, President Pakistan Businessmen and Intellectuals Forum, and All Karachi Industrial Alliance, and former provincial minister Mian Zahid Hussain said on Monday that Pakistan’s tax system is very unfair and contradicts the ground realities, which are the basis of almost all problems.

In Pakistan, 64% of taxes are collected in the form of sales tax, customs duty, and federal excise duty, while only 36% is collected in the form of direct tax, which is insufficient, he said.

Mian Zahid Hussain said that due to the flawed tax system, the rich are getting richer and the poor are getting poorer, and 40 percent of people in Pakistan have gone below the poverty line. Speaking to the business community, the veteran business leader said that it is impossible to stabilize the country’s economy without increasing the share of direct taxes in the tax system.

He added that notice should be taken of the repeated demands of the IMF, the World Bank, and other international organizations to balance Pakistan’s tax system.

The business leader said that the main reason for the fiscal deficit, inflation, imbalance of payments, and lack of investment and savings is our faulty tax system, which is very cruel and all its focus is on squeezing the people. The tax system has been continuously harming the poor rather than benefiting them to such an extent that the head of the IMF has to issue statements in this regard.

Mian Zahid Hussain said that the head of the IMF has strongly said that taxes should be collected from the rich and the poor should be protected through subsidies and other welfare measures. The IMF chief issued a similar statement in February as well, but her advice was ignored, he said, adding that the IMF is repeatedly highlighting the fundamental problems of the country, but our policymakers are not taking any interest in this regard.

The advice of the IMF has never been taken seriously; otherwise, the policymakers would have taken needed measures in the budget. The budget is not adding people to the tax net and pushing them away.

Mian Zahid Hussain further said that the tax base is increased only in statements; otherwise, the tax-to-GDP ratio would not have been 8.6% and the fiscal deficit would not have been 7% for many years because more than half of the economy is undocumented.

The government is not collecting taxes from various important sectors while receiving less taxes from many other sectors, resulting in a crisis every two or three years. Now it has become impossible to continue such policies because international organizations and friendly countries have also become fed up with Pakistan, and if the country is not put on its feet, no one will be able to save it from bankruptcy, he warned