Growing tax base
ACCORDING to data presented to Prime Minister Imran Khan by the tax authorities, more than 780,000 people have filed income tax returns for the tax year 2018 who were not previously doing so. This is probably the largest jump in the number of new return filers in over a decade, since the number is more than triple that of such individuals in the preceding year. It shows that a culture of filing returns is gaining impetus. Of course it took eight extensions in the filing deadline, which finally ended well into the next tax year for the first time in a decade, coupled with an amnesty scheme that was fuelled by at least three appeals for participation from the prime minister himself, to make this happen. Such a vigorous push behind tax compliance may not be possible year after year, and the real test will now be to sustain this momentum without such extraordinary measures.
Beyond compliance, there is the matter of actual revenue collected. The entire exercise of getting more people to file returns has yielded incremental revenue of Rs2.5bn, which is paltry by comparison to the targets and shortfalls facing the FBR. Clearly many of those who have filed returns in the tax year 2018 were those who were already paying their taxes through deductions at source, but were not filing returns thinking it to be unnecessary since the tax had already been paid. The real test of base broadening is when those who are neither paying nor filing are persuaded to become compliant. The FBR chief himself says that the services sector must bear the brunt of the base broadening exercise, and he is right in this. But getting retailers, transporters, professionals, schools and beauty parlours and other small- and medium-sized enterprises to register with the tax authorities, declare their incomes and turnovers, and start filing returns and paying their share of taxes, is the real challenge.
Efforts are under way to meet that challenge. Already the FBR has sent out hundreds of thousands of notices to those enterprises that have industrial or commercial utility connections but are not registered with tax authorities. FBR officials are also visiting markets to encourage participation in the fixed tax regime. And on top of that, a new front has been opened against smuggled goods, though how they proceed on this remains to be seen. With these efforts, the FBR is probably the most vigorous government department in action these days, upsetting the status quo in ways it has probably never done before. But failure to collect actual revenues, measured in rupees and not number of filers, means more mini-budgets — which means more uncertainty. Despite the increase in the number of filers, the Rs64bn shortfall in revenue collection in July and August continues to hog the limelight.
AN ancient scourge is back with a vengeance in Pakistan for the first time in two decades. Swarms of locusts have been advancing inside the country since early June, and after cutting a swathe of destruction through Balochistan, are now ravaging vast areas of Sindh. Thousands of acres of cotton crop could be devastated, that too at a time when Pakistan is already reeling from an economic crisis. South Punjab is on high alert given the alarming invasion of these insects in other parts of the country. The UN’s Food and Agriculture Organisation in its latest Locust Watch Report has warned that the situation in Pakistan is “most serious”. According to it, the second generation of these voracious insects has emerged and as they proliferate, so will their capacity to lay waste to cropland and exacerbate food insecurity.
Heavy rainfall coupled with high temperatures creates the perfect conditions for locusts to breed, and climate change could reshape their distribution area. Research organisations and government authorities in Pakistan must turn their attention to this possibility, of which we may well be experiencing the opening act. Provincial agriculture departments claim they are taking measures to combat the infestation, but they have been very slow off the mark. While close to 40,800 acres have reportedly been treated so far and training sessions held in Punjab to build the capacity of government officials and technical staff, many farmers in Sindh — Balochistan has already seen the worst — are complaining that vast areas have not been sprayed with insecticide. Interestingly enough, the present invasion may have its roots in the Yemen war, which has affected locust control measures there, enabling huge numbers of the insects to migrate further, through Saudi Arabia, Iran and onward to Pakistan. The authorities here thus had a substantial window in which to prepare for their arrival and ensure that spraying was done at the nymph stage — before the insects can fly — to forestall proliferation. Of course, the most severe impact of the swarms will be borne by the farmers. Aside from those in the fertile agriculture belt, rural populations in already impoverished areas will see their difficulties intensify further. Severe locust infestations, by giving rise to local food shortages and the disadvantages that come with malnutrition, have been shown to even impact school enrollment rates. This is an emergency — which may become a recurrent one — and must be treated as such.
ONE of the persistent yet lesser talked about challenges facing Pakistan is its growing population. From the distribution of essential healthcare and education services, to tackling unemployment and raising the general standards of living, the failure to control population rates has had far-reaching implications. Some have also put forth the argument that rising populations not only place a burden on a country’s limited resources, but they also contribute to the climate change crisis (of course, though, it is still largely the wealthiest countries that contribute the highest global greenhouse emissions). At 2.4pc, Pakistan’s population growth rate is much higher than in many parts of the world. Worryingly, the vast majority is under the age of 30. But when the long-awaited 2017 census results were announced, the realisation that we had now surpassed Brazil as the fifth most populous country in the world seemed to create no urgency amongst lawmakers. Currently, Indonesia, the US, India and China have higher populations than Pakistan. Unless concrete steps are taken to halt this trend, the country’s population could exceed 300m by 2050, warned a UN report this year. Past attempts to introduce family planning schemes and greater access to contraceptives have met with little success. Due to a lack of foresight and long-term implementation of population control policies by successive governments, along with societal stigma and resistance from right-wing quarters each time the topic of birth control is brought up, the problem has been allowed to fester.
At a recent event in the capital city, the Special Assistant to Prime Minister for National Health Services Dr Zafar Mirza highlighted the shocking fact that approximately half of all married women in the country do not use modern contraceptive methods, resulting in 3.8m unintended pregnancies each year. Early marriages, and the lack of knowledge about contraception and birth spacing, have all contributed to the position we are in today. Until these underlying causes are addressed, any and all other progress made will amount to zero.