The need to increase taxation and exports
PML-N is considered a business friendly party and every time it comes to power, it provides businesses and traders with special relaxation and rules that benefit them. However, this is also a sector that is under-taxed and could perform a lot better than it is now. The recent decision of the government of imposing withholding tax on business transactions was not taken well by the community and the government had to changes its position.
As it happens, the businessmen and traders want to do away with all of the withholding tax and make their point they have been on strike for a few days. Prime Minister Nawaz Sharif met with the representative of trade and businessmen associations the other day and listened to their grievances. While the whole country has been reeling under the effects of terrorism, the trade, business, export and finance have specially been affected with low output, high cost of business and security issues. Massive load shedding has been another problem that has plagued the country for a long time, and to make matters worse the businessmen and industrialists were forced to use other sources of energy, mostly oil based which in itself was selling at around Rs100 per litre, thus compounding the cost of production. Where businesses and industry were not under direct threat of terrorism, there was extortion and kidnapping for ransom.
While touching a constituency that the N League has always had good relations with is a tough task, there is no other option. Our tax-to-GDP ratio is lowest in the region and taxpayers form only a fraction of the population. However, the government needs to make sure that it takes into consideration the reservations of businessmen, industrialists and traders. It won’t do any good to just impose taxes on them if they are not earning anything. On the part of the industrialists and businessmen, they should make sure that they add to the country’s economy and that is only possible if they pay more taxes and increase their output and exports.
