ISLAMABAD, NOV 11: /DNA/ – Shahid Rasheed Butt, a business leader and past president of the Islamabad Chamber of Commerce and Industry (ICCI), on Monday expressed his concern over the falling tax-to-GDP ratio, saying that it was not suitable for the development of the country.
He said that regressive tax policies, implemented at the IMF’s directive, will never help the country obtain the money it needs.
Shahid Rasheed Butt said that the tax-to-GDP ratio is going down when it needs to go up to stay on the IMF’s program to avoid a default.
In a statement released today, the business leader said that the tax-to-GDP ratio has dropped from 9.22% in 2021-22 to 8.77% in 2023-24.
The income tax collection dropped by 21.5 percent in the last fiscal year, and despite what authorities claim, he said it will stay the same in FY2024-25.
He said a mini-budget would be introduced, giving the opposition a chance to agitate and punish the people who already had a lot of trouble.
He observed that Pakistan has big problems because the FBR has not changed for decades.
Shahid Rasheed Butt said that we still don’t know if a mini-budget will help the government stay on track or what it will do in the next fiscal year.
This problem will worsen because the government has not only done nothing to fix the FBR but also refuses to expand the tax net.
Instead, like every other government, it keeps the influential and most well-connected groups out of the tax net, even though it said it would do everything possible to fix the economy when it took office.
He noted that the average tax-to-GDP ratio for developing countries is around 18%, which shows how poor Pakistan is compared to other countries.
That’s why no money is left to spend on infrastructure or people’s well-being, he said, which also reduces critical social sectors.
He demanded that a national emergency be announced, forcing FBR to make changes and ensuring that tax policy is fairer for everyone.
It’s unfair that the few honest middle-class people who pay their taxes are being asked to pay more and more, while the highest-earning groups are not being taxed because they are connected to influential.
Authorities promised to tax the real estate, farming, retail, and wholesale sectors when it came time for the budget, but they didn’t.
He warned that there is a real chance that the IMF program will not go as planned if the government does not change the FBR and expand the tax net.
