ISSN 2330-717X

Top Tax Contributors To Pakistan’s Economy – OpEd

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No country can become a prosperous and welfare state unless it manages all its financial requirements both on development and administrative sides within its own financial resources. 

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Deficit in tax collection domain is one of the major problem faced by Pakistan since its inception and because of this the government is forced to borrow loans for virtually everything. As a result, there is less money in the budget to spend on the welfare and wellbeing of citizens. 

There are many factors that led to this deficit in the tax collection in Pakistan. The federal cabinet highlighted the issue of a huge backlog of revenue cases and showed its greater concern relating to revenue collection amounting to trillions of rupees. A low tax base leads to low tax revenue. The Federal Board of Revenue (FBR) after a survey claimed that only 1% of Pakistanis pay taxes. The evaders include many billionaire companies and individuals in the country. To enhance the tax base, Pakistan needs more entities from the corporate sector to file the taxes. Mostly the people from the private sector use means to evade tax payments and as a result the poor people have to suffer. However, in this vicious circle of tax evasion there are still some institutions and organisations that contribute heavily to the national economy through payment of regular taxes thus setting a good precedent for others to follow. 

One of these institutes is the Fauji Foundation. After 1947, proportionate share of the balance fund was transferred to Pakistan. Fund remained with the Government until 1953, when Rs 18.232 Million were transferred to C-in-C. In 1954, Fauji Foundation was founded as a “Charitable Trust” incorporated under “Charitable Endowment Act 1890.”

Fauji Foundation (FF) is rendering welfare to 9.9+ Million individuals, amounting to Rs 10 Billion per annum. It also provides jobs to a large number of civilians (70%), much more than retired service personnel (30%).

Fauji Foundation has contributed significantly to the national cause in the fields of industry, social development, employment opportunities while enhancing the national exchequer by paying considerable taxes. The commercial undertaking is contributing in overall economy of the country. In 2020/21, FF has deposited tax amounting to Rs 150 Billion in national treasury. FF has paid Rs 1 Trillion to the Government over the last five years as taxes and levies. Fauji Foundation is not enjoying any special privileges, and is playing by market rules and operating under relevant regulatory authorities. 

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Another organisation which is contributing to national development is Army Welfare Trust – AWT, is a financial and industrial group which seeks to provide stability and progress to the armed forces and the nation. AWT paid Rs 2.54 Billion as taxes during the period from October 2019 to Septemper 2020.

The data reveals some other private entities that pay heavy income taxes include the Oil and Gas Development Company Ltd (OGDCL) which paid Rs17.9 billion. It was followed by the Pakistan State Oil Company Limited (PSO). In the banking sector The United Bank Limited (UBL) paid Rs12 billion, while the Standard Chartered Bank (Pakistan) Ltd, Rs4 billion. If all commercial and business organisations and institutions continue to pay their fair share in the taxes domain, government will be much facilitated in terms of revenue collection to run its economic and financial affairs.

Humais Sheikh is an independent Defence Analyst based in Islamabad. He has completed his Masters in Defence and Strategic Studies from Quaid-I-Azam University, Islamabad.

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