Article Type

Article

Description

Successive governments have been confronted with the issue of a stagnant or declining tax revenue stream. Many reforms of the Federal Board of Revenue, tax policy and tax administration have been attempted but the results have been painfully disappointing.

To analyse the reasons for the tax regime’s intractable nature we have to adopt a more systemic approach by dissecting the economy into sectors including rural and urban; formal, informal and illicit; agriculture, industry and services; and income distribution groups.

Of Pakistan’s potential labour force of 75 million, 18 million are not participating, five million are unemployed and 52 million employed. The rural labour force accounts for approximately 70pc of the total. Aside from the income of land holdings over and above 12.5 acres of irrigated and 25 acres of non-irrigated land, the labour force mostly consists of landless peasants, unpaid family help, casual workers, subsistence farmers, small vendors, etc. These categories are largely exempt from direct taxes and bear only indirect taxes on inputs and consumption. The main burden falls on urban incomes earned by 30pc of the labour force.

Publication Source

Dawn

Publication Date

3-11-2014

Pages

1-2

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