Detailed SUMMARY of the Article “Fancy Tax Scheme,” Dawn, September 23rd, 2024

The article critically examines Pakistan’s recently proposed tax enforcement mechanism, labeling it as ineffective and misaligned with the goal of broadening the tax base. The editorial argues that the new tax policy disproportionately burdens compliant taxpayers, particularly the middle class, while allowing tax evaders to remain unscathed. The scheme, approved by the prime minister, seeks to prevent non-taxpayers from purchasing assets such as cars, real estate, and financial instruments and restricts their ability to open bank accounts. However, it fails to abolish the non-filer category unique to Pakistan, allowing tax evaders to continue their avoidance strategies. The mechanism divides taxpayers into two groups: those declaring an income below Rs10 million and those above. The article points out the unfair assumption that those earning less than Rs10 million are underreporting their income, thus treating them as potential tax evaders, while individuals above this threshold escape scrutiny. Moreover, the system amplifies the discretionary powers of tax officials, increasing the likelihood of corruption. The article stresses that instead of introducing convoluted enforcement mechanisms, the government should focus on plugging legal loopholes, enhancing accountability, and implementing a fair tax system supported by political will and efficient bureaucracy to genuinely expand the tax net and » Read More…