The proposal to raise income tax rates by almost six times in the next budget is bureaucratic move to raise revenue, something to be done to fulfil payments to the IMF, without regard to the paying ability of those who will suffer the impact.
As those who will have the taxes raised for them will mostly be salaried persons, the tax machinery has once again tried to get away with the expedient of raising revenue by imposing further taxes on those already paying, rather than widening the tax net and bringing within it powerful interests who have so far successfully avoided taxes, and which the government intends to allow to continue doing so. The assumption that people can pay multiples of existing tax burdens is just no longer valid, but is contemptuous. The tax authorities go for salaried persons, because collection is easy, by deduction at source.
However, if this is the path chosen by the government to cut its deficit, there will be inevitable questions, particularly about vast agricultural incomes, which remain tax-free, with those earning those incomes enjoying the commanding heights of the polity, including in the legislatures. There will also be queries about how the government spends money, with taxpayers’ money being wasted on luxurious lifestyles for the ruling classes whose number has grown with the expansion of the cabinet.
Instead of burdening those who already pay taxes, and who have had a very rocky time of it because of recent inflation, the government should look to bringing in the tax net all those who do not pay because they enjoy tax-free incomes as well as positions of power, and to reduce its own expenditures by proper austerity measures. This has become particularly important as the government is to face a general election in the coming year. The government cannot afford to go into it having raised tax rates. The increase will combine with other government failures, such as over energy loadshedding, inflation, crime increases and foreign policy, to make the government’s task at the hustings very difficult.
MOHAMMAD FARREED
Karachi
