Our governments and international aid agencies tell us that Pakistanis do not pay enough taxes. We do not agree as we pay our taxes regularly. We run our businesses and perform our jobs dutifully. We have decided to organize ourselves to articulate our aspirations as tax paying citizens of Pakistan. We believe that the state and citizens live under a contract under which the citizens pay the state to deliver public safety and public goods. Tax Payers Alliance Pakistan (TPAP) is a voluntary network of Pakistani tax payers to remind everyone about the implications of this contract. It is a pressure group of professionals, business owners and individuals to demand low taxes, government transparency and an end in the undue and wasteful government expenditures.
Resurrecting the contract between state and citizens through reforming taxes and government spending
To create a potent pressure group, comprising citizens of Pakistan from all walks of life to advise, educate and influence the Government and Public Policy in Pakistan to lowering the taxes on businesses and individuals, simplify the taxation regime, and to urge the government to eliminate undue and wasteful
- To influence the Public Policy for lower taxes and taxation reforms
- To dispel the widely believed impression of tax theft in Pakistan’s economy
- To create an environment where ease of doing business is ensured
- To reduce the undue and wasteful expenditures of Government
- To encourage the government to improve transparency in public finance
Milestones for FY 2020-21
- 100 members within 2020
- One Tax Conference in the first quarter of 2021
- Articles in newspapers
- Igniting debate on social media
- Present a charter of demands to the Parliament in 2021
Any Pakistani citizen, individual or corporate body, who is a tax payer and agree with the mission can join the network by signing up this form. It is an initiative supported by an independent think tank PRIME.
Charter of Demands/14 Points Agenda of Tax Reforms by Taxpayers Alliance
Taxpayers Alliance Pakistan has released a Charter of Demands for the upcoming federal budget which define broad tax policy and principles, that the Alliance considers integral to tax reforms which can lead to economic growth. The Taxpayers Alliance has asked that the Government must commit to fiscal discipline, minimizing its wasteful expenditures while maintaining complete transparency with a view to demonstrate to the public that their taxes are used in the most judicious manner.
The Alliance has called for a shift from the regressive taxation structure to a progressive one by increasing reliance on direct taxes though imposition of a low-rate, broad-based, predictable and wherever possible, flat rate taxes. The Taxpayers Alliance has called for, and supported the move to, end discrimination and exemptions in taxes and has urged to tax all sources of income uniformly. Highlighting the plight of withholding taxes, the Alliance has asked for a gradual elimination of all presumptive taxes with certain
The Taxpayers Alliance has also called for considering negative taxation while
eventually replacing direct cash transfers, subsidies and cross-subsidies which suffer from poor selection thus wastage of resources.
The 14 points charter of demand is an evolving document, which the Alliance has now released for open feedback and consideration by the budget policy makers about two months before the budget is announced. These points are:
- Government must commit to fiscal discipline, minimizing its wasteful expenditures while maintaining complete transparency with a view to demonstrate to the public that their taxes are used in the most judicious manner.
- Taxes should be few, low-rate, broad-based, predictable and wherever possible, flat.
- Ideally, income tax and a mild wealth tax on certain types of wealth should become the main tool of tax revenue.
- There should be no discrimination and exemptions in taxation. For example, all sources of income must be taxed equally. Those in need of specific incentives may be provided relief through other government entities such as Ehsaas, BISP, M/O Finance etc as direct transfers.
- Presumptive, minimum and turnover taxation must be discontinued. Withholding income taxes may be allowed on salary, dividend, interest income and payment to non- residents under the concept of pay as you receive the income. The incomes from all source should be clubbed and there should be no separate block taxation. Taxes withheld should be adjustable in all cases.
- Import taxes in general and especially for raw material should be minimized to encourage investment, production and reduce inflation.
- General Sales Tax should be reduced significantly and harmonized across the federal and provincial jurisdictions. Preferably, Harmonized Sales Tax on goods and services should be collected by a single national tax agency to reduce cost of compliance. Distribution of taxes should be strictly under Article 160 of the Constitution through National Finance Commission Award. Efficient tax administration is also necessary for rational tax policy.
- Every earning individual or firm or corporate entity must file an online income tax return which is simplified to the extent that those people who cannot read/write English, should be able to file their tax returns on their own and those who need to declare additional information may be allowed over and above that.
- We should encourage, and not discourage, corporatization through taxation.
- Compliance cost for registrations, tax payments and returns filing should be significantly reduced.
- Introduce a penalty (in the form of return of court fee, lawyer fee and interest payment on amount blocked) on FBR in case of degree in favour of plaintiff against FBR.
- No General Sales Tax should be collected in advance at import or manufacturing stage.
- Tax exemptions available on pensions and savings instruments should be withdrawn. Additionally, on the assumption that a meaningful negative tax/transfer system will be introduced, all subsidies and cross-subsidies intended to mitigate the plight of the poorer segment of the population should be removed. That is, the quantum of the negative tax/transfer should cover all the subsidies and cross-subsidies, that are dispensed through various silos within the government.
- Tax credits for innovation, research and development (R&D) may be allowed only over a specific turnover of business and/or to the business associations with clear performance benchmarks and sunset clauses. Taxpayers Alliance Pakistan is a voluntary network and any Pakistani citizen, individual or corporate body, who is a taxpayer and agree with the mission can join the network. It is an initiative supported by an independent think tank PRIME.