Call to improve tax policy

LAHORE : Tax exemptions were causing loss to the tune of billions of rupees annually to economy of Pakistan. Tax justice can play a key role in redistributing wealth to reduce poverty.

These views were expressed by speakers at the awareness session on “Tax Justice & Budget Advocacy”, organised here, Friday. Speaking on the occasion, Shaw Morad, a student of Finance & Accounting, told the participants that a good tax policy can play an important role in redistributing wealth and it can have an income redistributive function, which is progressive and pro-poor. He said our tax to GDP ratio is around 11% with just 0.9% of the people of Pakistan paying taxes. He told that 85% of the total tax revenue is collected through indirect taxation vis-à-vis 15% direct tax. He urged the need to increase direct taxes through progressive mode of taxation and bring more and more rich people into the tax net instead of burdening the poor with more taxes. Executive Director of an NGO Bushra Khaliq said the rising inequality threatens not only social and political stability but also economic growth and financial stability. The participants said that reasons behind the low tax to GDP ratio in Pakistan was primarily due to number of inherent weaknesses.