Fixing the tax system

THE existential threat to Pakistan starts with the letter ‘T’ — but it’s not the Taliban. It’s ‘Taxes’. More precisely, it’s the lack of a fair and equitable taxation system, and the unwillingness and inability of successive governments to fix it. This was the gist of the first part of my column two weeks ago. This part will outline what can be done about it. But first, it will be useful to review the recently presented federal budget for 2013-14 from the perspective of fairness of ‘burden sharing’. While the budget does make a welcome — albeit somewhat modest — attempt to widen the tax base, it falls short of the standards of equity and fairness by placing an unduly large burden on existing and honest taxpayers. Take the case of the higher tax incidence on salaried persons — a group of around 900,000. While this group of captive taxpayers will be coughing up substantially more tax revenue, the group of professional service providers (doctors, lawyers, architects,...