Getting serious

Finance Minister Muhammad Aurangzeb seems bent on taking the message of a crackdown on tax evaders far and wide. Perhaps that is why he chose Kamalia, a tehsil in Toba Tek Singh district, to address a press conference on the issue of the tax-to-GDP ratio, which he said was too low at the current 9.5 percent, and which he vowed to take to 13 percent. This seems to be the bottom line with the IMF, as the path out of Pakistan’s financial troubles. This also makes a certain sense, as the collection at present does not fund the debt servicing needs of the government, It is interesting that Mr Aurangzeb not only wants to tax previously untaxed areas, and emd an estimated Rs 3.9 trillion in exemptions. He has revealed that 32,000 retailers had been included in the tax net, and would start paying tax from July. By going after retailers, he is going after those considered a pillar of his party. Mr Aurangzeb forthrightly addressed the concerns retailers have often expressed about the taxation machinery, admitting that people were scared of becoming filers, and then getting stuck in a quagmire. While taxmen know they will never win popularity contests, so long as their actions justify the impression that they are engaged in enriching themselves rather than the treasury, they will find taxpayers recalcitrant.
While Mr Auranzeb was being wise in Kamalia, KP CM Zli Amin Gandapur was throwing around his weight in Dera Ismail Khan, where he gave an example of direct action, but at a federal installation. By having a closed feeder restored, he may have won the applause of the crowd, especially those who had been sweltering in the heat, but he was probably acting beyond his jurisdiction, as the feeder was a federal installation, and nobody in the feeder staff had him in their chain of command.
As if towing up the federal government further, he threatened to withdraw support for the IMF loan if the federal government did not pay the Rs 600 billion it owed the KP government. It is a demand unlikely to be met for two reasons. First, the IMF is likely to object to the federal government shelling out such a sum. Second, the sum has not been reconciled, in the sense that both federal and KP governments agree that that is the sum outstanding. Such grandstanding should be eschewed in favour of problem-solving.