Taxing people is one of the major sources of a
state’s revenue system. A tax is a financial charge that a government imposed
on taxpayers through different means. Revenue generated through tax is then invested
by the government in various public development projects. Basic principle of
taxation is to tax the rich and spend the money for the welfare of all and
sundry. Pakistan is one among the few states whose tax system has many
loopholes and therefore the country is facing an acute budget deficit problem. As
long as these problems are not addressed properly the country cannot progress
Tax Base: The tax base of Pakistan’s tax system is narrow
which means that some sectors such as agriculture has been exempted from
taxation. Similarly some sectors are not taxed as per their performance and
some taxpayers successfully evade tax payment.
Property: It has also been observed that in Pakistan the
elite class usually documented their properties with fake names or with the
names of their relatives. In this way they either succeeded in tax evasion or
in reduction of payable amount.
Laundering: It is another major hurdle in tax
collection system in Pakistan. This problem gained much attention in Pakistan
after Panama Leaks scandal. Almost all political elites of Pakistan are
involved in this crime. These days we see that the chairman of Pakistan Muslim
League (N) and Pakistan People’s Party (PPP) are facing trial in money
Ignorance Of Political Elites: The intentional
ignorance of political leaders towards the enhancement and development of a
strong tax culture in the country is also a major problem. One of the major
reasons behind the lack of political will of the political leaders of the
country is their involvement in tax evasion practices.
Solutions For Economic Crisis Of Pakistan
Paralyzed Institutions: Another major problem with tax culture in Pakistan
is that the corrupt political leaders of the country through their political
powers have paralyzed all the tax collecting institutions. Due to this reason
tax collecting agencies failed to collect targeted level of tax every year.
Number Of Taxation Agencies: Large number of tax
collecting agencies is also a problem. In Pakistan more than Seventy taxes are
collected and managed by Thirty Five agencies. Such a large number of agencies
have made the collection process much intricate.
Reluctance: Public reluctance to tax payment has
made the tax culture even more worsen. Taxpayers in order to avoid tax payment
create many hurdles for the agents that not only slow the process but also
results in low rate of collection.
Agents: Corrupt agents of the national tax collecting
agencies that either for monetary or political motives help taxpayers in tax
evasion, is also a major problem.
Public Awareness: Public low awareness about the benefits
of the payment of tax is another major problem.
One of the major reasons behind all the above
mentioned problems is the lack of trust of people in national institutions and
government. Over the past decades if government has sincerely invested tax
money for the welfare of people and the country then today we would not face
most of these challenges. The eighteenth century Americans’ famous notion “No
Taxation without Representation” exactly defines the reluctant behavior of Pakistani