Incidence of Taxes

Abstract

While most of the countries around the world have established a reasonably effective and fair system of taxation and have substantially improved their tax-to-GDP ratio, Pakistan is experiencing an enigmatic situation with a fast deteriorating tax structure, unlawful delegation of legislative power to the executive, provision of a legal umbrella to the unscrupulous for whitening ill-gotten money, and the classic case of poor paying taxes to support the rich. Hidden and huge untaxed business empires – generating money power essential for winning elections in Pakistan – have crippled the very structure of the State and muzzled all institutions –Legislature, Judiciary, and Executive. The rich and powerful keep assets worth billions of rupees abroad and home and get frequent amnesties. The chapter highlights the critical areas of Pakistani laws meant to counter tax evasion and corrupt practices by public office holders, civil-military officials, and businesspersons. It highlights various shortcomings in the existing tax and other laws, contradictory provisions, and policies coupled with faulty strategy and lack of a comprehensive plan to uproot tax evasion and other financial crimes. It also suggests a new approach to tackle the threats posed by corruption, tax evasion, money laundering, and terrorist financing that undermines national security.