Tax evasion is one of the biggest and oldest economic challenges facing Pakistan. We cannot ensure the achievement of macro-economic goals until the country’s revenue collection is increased. Unfortunately, despite its low tax-to-GDP ratio, Pakistan loses an estimated Rs300 billion every year due to illicit trade in only five economic sectors. In the tobacco sector alone, the sale of illicit cigarettes costs the government more than Rs70 billion in taxes.
To counter tax theft, the government has recently launched a track and trace system, initially for industries. Although it is a commendable effort, there are serious reservations regarding its implementation due to its feasibility and the costs incurred. Considering the challenges the country faces, Pakistan will have to increase its tax collection or it will need bailouts, one after another.
Abu Bakar Kareem
Karachi
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