Published Date: Mar 12, 2015
Pakistan loses Rs 500 billion annually ‘due to tax exemptions’
A recent study
has revealed that due to tax exemptions, Pakistan loses Rs500 billion
annually which is 1.5 times the annual budget for education.
study on ‘Multiple inequalities and policies to mitigate inequality
traps in Pakistan’ jointly conducted by Dr Abid Aman Burki, Dr Rashid
Memon and Dr Khalid Mir from Lahore University of Management Sciences
(LUMS) in collaboration with Oxfam was launched by Sustainable
Development Policy Institute.
Federal Minister for
Commerce Khurram Dastagir was the chief guest. The report said that lack
of tax revenues puts pressure on the budget and leads to inflationary
monetary policies. Low tax base also implies that there is little room
for investments in nutrition, public education and health, the study
The report said that Pakistan can get
additional tax revenue of Rs80-115 billion, if the exemptions on
agriculture are withdrawn. The study said that the inequality is due to
lack of opportunities to access health care and education, unequal
distribution and access to land and capital. Unjust policies including
unfair taxation, low spending on social protection and services has
increased inequality, it continued.
It revealed that the
consumption share of the richest 20 per cent population in Pakistan was
more than five times the share of poorest 20 per cent population in the
year 2011-12. Similarly spending share of top 10 per cent of population
was 31 per cent while poor 40 per cent of population’s spending share
was only 20 per cent meaning 18 million richest people spend one and
half time more than 72 million poor people.
In terms of
intra-province inequality, according to the report, Sindh is the most
unequal province in Pakistan with highest Gini index which means the
divide between rich and poor in Sindh widened followed by Punjab, while
Khyber Pakhtunkhwa and Baluchistan provinces had the lowest levels of
inequality. The level of urban inequality is considerably higher than
rural inequality which indicates that urban prosperity is not equally
Speaking on the occasion, Khurram Dastagir
lamented that media coverage is “crude” as coverage is there but
reporting is somehow less. He said that the government is trying to
pursue evidence-based research in framing national economic policy.
about the under reporting of Pakistan’s economy, he said that in
Pakistan, we do not have markets that come under the definition of
economic market. Instead, we have large bazaars in which each day
billions of rupees are transacted on a simple white paper without coming
under taxation net. He said this is creating a fog and we cannot talk
with clarity. He said it forces the government to increase direct taxes.
The government has no framework or tools to enter into the bazaar
economy to regulate it which is another hindrance in eradicating or
narrowing inequality from Pakistan.
Director Dr Abid Suleri said that sustainable development is impossible
without social justice. He lamented that currently there are no equal
opportunities but only opportunities where the rich get richer and the
poor get poorer. He observed that social justice cannot prevail without
bridging the gap between the haves and the have-nots. He also said that
social justice should be provided impartially to all. He also insisted
that the economy should be structured in way which ensures that the big
fish are captured in the tax net to stop unchecked wealth accumulation.
Abid Aman Burki said that poverty is under reported in Pakistan by the
government surveys like Gini coefficient to estimate inequality. In the
question hour, Jabbar Khan, Country Director, Oxfam-Pakistan said that
80 per cent of the rich did not amass the money through hard work or
better strategies but by evading taxes.