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Dawn Editorial 2 December 2020

Tax challenge

THE FBR has released tax collection figures for the first five months of the present fiscal year. But they are not looking pretty even though tax collection has crept up since the removal of the coronavirus restrictions. The FBR has marginally surpassed its target of Rs1.67tr, which is seen to be on the lower side, for the period between July and November, but tax collection is still forecast to lag far behind the budgeted target of Rs4.96tr for the entire financial year to the disappointment of the cash-strapped government.
The IMF is reported to already have projected a gap of around Rs300bn between the budgeted target and the expected collection for the entire fiscal year. And if the government is forced to once again lock down the economy, fully or partially, to check Covid-19 infections, the tax shortfall at the end of the current year would be even worse.
Read: Virus surge, restrictions threaten economic recovery
Equally worrying are the very low numbers of income tax filers, which indicates the failure of successive governments to broaden the extremely narrow tax base and jack up the share of direct (income) tax in overall tax revenues. Last year, the FBR reported that nearly 3m people had filed income tax returns although a large number of them had declared their income to be below the tax threshold. This year only a third of them have filed returns thus far despite the fast-approaching extended deadline of Dec 8.
This is in spite of the claims by senior government officials that the board has credible data of 7.4m people whose withholding taxes are deducted, but who do not file their returns. Apparently, this number also includes over 3m people who, according to the FBR, frequently travel abroad, live in large homes in posh localities and drive luxury cars but don’t pay any income tax.
The shrinking share of income tax in tax revenues should be a cause of concern for policymakers because of the established linkages between increasing poverty and the government’s growing reliance on indirect taxes. The share of direct and indirect tax during the last 10 years has been 35pc and 65pc, according to the FBR. In income tax collection, the element of ‘indirect income’ taxes was 20pc, which underscores the fact that the actual share of direct taxes has not been more than 15pc.
The growing share of indirect taxes and presumptive levies in tax revenues means that the burden of the wealthy is being shifted onto the low-middle-income people. The rich, on the other hand, are not only spared the payment of their share of taxes but also given periodic amnesties to legalise tax-evaded holdings accumulated over the years. No effort to increase tax collection can succeed without broadening the base and reforming the income tax regime with a view to eliminating presumptive and withholding taxes.

 

 

Needless stigma

IN a world roiled by the coronavirus pandemic, it can be easy to forget there is another global epidemic that has been around far longer. And the numbers are staggering. Since the late 1970s, an estimated 42m people have died of AIDS-related illnesses. Until end 2019, there were 38m people living with HIV. In Pakistan, according to the National AIDS Control Programme, an estimated 190,000 people are infected with this disease; of them, only about 44,000 are aware of their status and registered with treatment centres. The current trend is not very encouraging. Over the last few years, the situation in Pakistan has evolved from low prevalence to concentrated epidemic, with HIV prevalence among injecting drug users registering over 5pc in at least eight major cities. Other high-risk groups are well on their way to reaching this threshold. Nearly 5m people, categorised as bridge population, are in direct sexual contact with these groups and susceptible to being infected through unprotected sex. That could be the gateway to HIV/AIDS becoming a generalised contagion. Ignorance about the disease is rife: according to UNAIDS, only 4.29pc of youth between 15 and 24 years of age in Pakistan correctly identified ways of preventing sexual transmission of HIV. From ignorance stems stigma, which mars patients’ quality of life immeasurably and contributes to the culture of secrecy surrounding the ailment.
A report in this paper yesterday, World AIDS Day, recalled one of the worst local outbreaks of HIV/AIDS in Pakistan and the toll it has taken on the patients and their families. In June 2019, out of 27,300 individuals screened for HIV/AIDS in the Ratodero taluka of Larkana district, 803 — including 661 children — were found to be HIV-positive. An investigation later found that poor infection control practices, including shockingly elementary blunders such as reusing syringes and drips, were largely to blame for the spike. As a result, hundreds of clinics and unlicensed blood banks were closed across the province and a new antiretroviral treatment centre for children was set up in the district to provide easy access to medication. But as the news report yesterday revealed, the psychological toll of being treated like social pariahs makes the ordeal of patients and their families intolerable. A more effective media campaign is needed. An aware populace will not only take precautions to avoid being infected, but also realise there is no need to shun HIV-positive people.

 

 

Horrific accidents

WAS it human error, defective equipment or a faulty vehicle? This question is once again being asked in the aftermath of a fire near Narang Mandi, Punjab, that broke out on Monday after a road accident, and extinguished the lives of 13 passengers travelling in a van. Immediate information said the vehicle caught fire after colliding with a bus. A number of passengers on the bus were reported to have been seriously injured. There were no survivors in the van — because there was no chance of escape after the fire erupted. Poor visibility because of the fog was blamed. Just a day before, another horrific accident, this time in Pano Aqil, Sindh, resulted in the deaths of at least 11 people. Unfortunately, in this country, the urge to overtake and speed on the roads, or to drive in hazardous weather, is hardly tempered by any sense of caution. Impatience kills, as it did in Pano Aqil where bricks intermingled with human cargo atop an open truck whose driver reportedly made a risky move. And impatience also kills in partnership with risky apparatus, as in the case of the accident near Narang Mandi. The LPG cylinders burned at their most vicious.
There have been campaigns to make roads as safe for travellers as possible. There have been a few improvements but clearly much more remains to be done as the number of road accidents are very high. The WHO says that, globally, “approximately 1.35m people die each year as a result of road traffic crashes” and “93pc of the world’s fatalities on the roads occur in low- and middle-income countries, even though these countries have approximately 60pc of the world’s vehicles”. It is obvious Pakistan would be among these low- and middle-income countries, but it may have challenges specific to it. For instance, vehicle fitness may be a bigger problem here than in some other places, and the particularly smoggy conditions in parts of the country may require sounder planning and better checks than what we have at the moment.

 

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