Voters await upcoming government’s economic response

LAHORE: The government in waiting would inherit poor human resource, low tax base, high recurring expenditure, stressed manufacturing sector, and high expectation of electorate. It would have a huge task ahead to deal with all the collective problems.

Successive governments in the past two decades after assuming power have taxed the common man heavily, playing on their patriotic sentiments to take the country out of a crisis. Every time the government changes, the gap between the rich and the poor increases.

This time as well, the poor have lost the capability to absorb more taxes (inflation is also an indirect tax on the poor). They are barely surviving by making compromises on the quality of food, education and health. They have no choice, as the ever increasing costs are much higher than their incomes.

The next democratic government must understand that the poor have pinned high hopes on them. They are expecting relief from the government right from day one. They would be extremely edgy even on slightest additional pressure on their pockets; revenues this time around would have to come from the pampered segments of the society.

The poor live for generations as poor because they lack education and skills. The underdeveloped human resource would nullify even the best efforts of the government to pull the poor permanently out of poverty.

Moreover, poor skills are impeding establishment of high tech industries in the country. In fact even the mid-level skills are scarce in the country. The main priority of the new government should be to revamp our educational system to ensure that we produce best technicians and not ‘baboos’.

The resources needed to revamp the economy and education would have to come from the tax evading sectors. All evasions whether total like smugglers and informal sector or partial like under-filing or under-invoicing would have to be fully addressed.

Apart from smugglers, traders and transporters, there are two very important sectors where tax evasion is rampant. Take for instance the construction sector. The construction tycoons are playing in billions and they do not pay any taxes or pay nominal taxes compared with the income they generate. You talk to a construction guru and he would immediately claim that the government collects 25 percent of the construction cost as taxes. This is true, but look who pays those taxes.

It is the buyer who bears the taxes on cement, tiles, steel, cables, electrical switches, fans, lightings, paints etcetera. The property developers and small contractors living lavishly on construction related income hardly pay any taxes.

They drive most expensive luxury cars; some even own their airplanes. They live in most expensive houses. They should be as lavishly taxed as lavishly they live. Then look at our stock market tycoons. Many of them are among the richest citizens of this country. The capital market with book value of over $70 billion is of no use to the economy if the players benefiting from stock trades do not pay taxes or if those having black money are allowed to buy stocks without any questions being asked.

They should be adequately taxed otherwise we would continue to pamper crooks and thieves as partners in our listed companies.

Highly educated professionals commanding huge respect in the society are also under-filers of their tax returns. There are numerous doctors earning overRs100,000/day through private practice and there are few who earn over Rs200,000 a day without proper documentation.

They have no right to enjoy respect if they do not share their largesse with the state by paying their due taxes. Then there are lawyers who charge exorbitant rates when they represent the state and their charges must be in the same range when they appear for private parties and big corporations. They also do not pay taxes in accordance with their income and life style.

The tax avoiders and under filers are getting richer with every passing day at the expense of the poor, who see their resources shrinking. The relief to poor can only be provided by taking actual taxes from the rich.