Chairman of National Business Group Pakistan, President Pakistan Businessmen and Intellectuals Forum, and All Karachi Industrial Alliance, and former provincial minister Mian Zahid Hussain said on Monday that Pakistan’s tax system is very unfair and contradicts the ground realities, which are the basis of almost all problems. In Pakistan, 64% of taxes are collected in sales tax, customs duty, and federal excise duty, while only 36% is collected through indirect taxation, which is insufficient, he said.

Mian Zahid Hussain said that due to the flawed tax system, the rich and the poor are getting poorer, and 40 per cent of people in Pakistan have gone below the poverty line.

Speaking to the business community, the veteran business leader said that it is impossible to stabilise the country’s economy without increasing the share of direct taxes in the tax system. He added that notice should be taken of the repeated demands of the IMF, the World Bank, and other international organisations to balance Pakistan’s tax system.

The business leader said that the main reason for the fiscal deficit, inflation, imbalance of payments, and lack of investment and savings is our faulty tax system, which is very cruel, and all its focus is on squeezing the people. The tax system has been continuously harming people with low incomes rather than benefiting them to such an extent that the head of the IMF has to issue statements in this regard.

Mian Zahid Hussain said that the head of the IMF has strongly stated that taxes should be collected from the rich and that the poor should be protected through subsidies and other welfare measures.

The IMF chief issued a similar statement in February as well. Still, he said her advice was ignored, adding that the IMF is repeatedly highlighting the country’s fundamental problems. Still, our policymakers need to take more interest in this regard.

The advice of the IMF has never been taken seriously; otherwise, the policymakers would have taken needed measures in the budget. The budget must add people to the tax net and push them away.

Mian Zahid Hussain further said that the tax base is increased only in statements; otherwise, the tax-to-GDP ratio would not have been 8.6%, and the fiscal deficit would not have been 7% for many years because more than half of the economy is undocumented. The government must collect taxes from various important sectors while receiving less taxes from many other industries, resulting in a crisis every two or three years.

It has become impossible to continue such policies because international organisations and friendly countries have also become fed up with Pakistan. He warned that no one can save it from bankruptcy if the government is not put on its feet.