Mashallah. With Great Zardari’s backing this will surely become a reality. :k:
Won’t it?
Pakistan vows to target rich tax evaders as IMF concludes talks on vital loan
November 3 2008 02:00
Pakistan will make significant efforts to improve its taxation system in the next 12-18 months, the country’s de facto finance minister said.
Shaukat Tarin, the prime minister’s adviser on finance, said measures would include politically unpalatable steps such as taxing the incomes of influential landowners and plugging loopholes to curb large-scale evasion.
Pakistani officials and a technical team of the International Monetary Fund concluded talks last week in preparation for Pakistan formally seeking an IMF loan. Economists say the loan is central to stemming a continuing economic slide and depleting foreign currency reserves.
The Pakistani government has said that tax reforms are part of the country’s domestic economic agenda and are not driven by IMF conditions. But economists believe that resolving chronic problems in the tax collection system will strengthen Pakistan’s case for a new IMF programme.
“We have our own compulsions which we have to meet. Making everyone pay their taxes is in our interest,” Mr Tarin said in a Financial Times interview.
“Reforming the tax collection structure is central to our economic policies.”
He rejected suggestions that tax reforms would fail in the face of resistance from powerful lobbies. Mr Tarin said he had the backing of Asif Ali Zardari, the president, “to do everything possible to carry forward economic reforms”.
Under expected changes, farm owners will for the first time face the prospect of paying an income tax on their earnings, something they have successfully blocked thanks to their political influence. The plan also involves bringing those businesspeople and industrialists into the tax net who either totally evade their income-tax payments or pay a sum that is far below their dues.
Mr Tarin promised to raise the tax-to-gross domestic product ratio to at least 15 per cent in the next five years “through making sure that we tackle evasion and make everyone pay their dues. This is essential for our economic future”.
The country’s tax-to-GDP ratio is only 10.5 per cent. Less than 1 per cent of the country’s population of 165m pays income tax.
Western economists said improving tax collection would be an essential test of Pakistan’s ability to go ahead with reforms and overcome resistance from powerful interest groups.
“If Pakistan can improve the workings of the tax system, this country has already won half the battle ahead. That is how central tax reforms are for the future” one said.
Mr Tarin said discussions between the finance ministry team and IMF staff had resolved most issues and were now working towards an agreement on the extent to which interest rates had to be raised to tame inflation, which is running at about 25 per cent. “We want to resolve this matter [of interest rates] before we close our discussions with the IMF,” he said.