Ultimate tax Haven (Tax reforms)

Most recently there is a huge hue and cry over 600 Pakistanis from different sectors having offshore accounts to manage their wealth. Although not all of them can be described as illegal provided sources of income are justified and the taxes are paid. But nobody is paying attention to huge non-payment of tax returns in our own country marred by sluggish tax collection system. Over 4 to 5 million people evade taxes annually. 1.1 million Pakistanis pay taxes out of which 600,000 pay some amount of it through voluntary tax regime. it accounts to 0.24pc or 1 out of 375 people. Compared to our neighbor India whose collection is 2.7pc. Indirect taxes such as tax on telecom, utility,petroleum and consumables are not a substitute for direct tax filing. 1.9pc of total population are registered as taxpayers which accounts to 60 percent potential tax base. But practically only 0.45 percent file taxes which accounts for 15 percent of total population base. 0.24pc filed tax returns as part of tax filing and assessment regime which is 534000 citizens or 1 in 375 persons. Only 36838 people give more than 50000 in income tax annually. Corporate sector is giving 77 pc taxes. personal income tax is 23 percent. Out of .5 million registered doctors only 14000 gives income tax. similarly .5 million registered lawyers and only 5000 practicing lawyers file tax returns. Most of government revenues originates from taxation on petroleum and remaining is pumped from 1 pc of large corporate sector. Experts believe this system to be highly inequitable and unsustainable in long run. Small net of Corporate sector is bearing heavy burden and new investments are stalled in the economy. This situation is affecting job creation, which is giving rise to informal economy which will hurt social mobility of labor force in future. Due to such poor performance of tax collection, public is suffering from quality service deliver as government is suffering from precarious condition due to funds drought and priority based spending on well off areas. Government has also lost opportunity to impose equitable tax on huge revenue garnering real estate and equity market. While poor has been badly affected by inflation tax which is due to government's recovery of budgetary shortfalls. Pakistan needs due attention on its tax reforms and shorten the rich poor gap by implementing such reforms and also decrease tax authorities influence to succeed such steps. Source: http://www.dawn.com/news/1258002/ultimate-tax-haven