Addressing tax evasion in Pakistan is an uphill task and the reality has been acknowledged by none other than Federal Board of Revenue (FBR) chief who has revealed that over four million willful law violators are still outside the tax net. For a state to function, it is mandatory to pass laws followed by their implementation, without discrimination for running its affairs. The massive tax evasion and flight of capital from Pakistan continues to erode this nation from within. State sovereignty cannot be maintained if the national economy continues to depend on foreign loans to bridge the ever widening gap between tax and GDP for the benefit of a few. A country plagued by a severe financial crisis cannot afford to turn a blind eye to money laundering and must be seen exploiting all existing avenues for tax collection to raise enough finances to invest in education, health, the provision of basic necessities and law enforcement. Unfortunately, those who have benefited from weak governance continue to be an obstacle to any resolve to give Pakistan a chance to enforce the writ of the law.
In the past, efforts have been made to broaden the tax net and increase dwindling finances by announcing tax amnesty schemes, while allow maximum relief to those who owned assets in the country and abroad. However, these schemes have failed to bring desired results. On the other hand, the government is under International Monetary Fund’s (IMF’s) pressure to take steps to widen the tax base. The conditionalities of the IMF programme aside, the government desperately needs to boost its revenues. For bringing all the wealthy population of the country into the tax net, the government needs to implement a unified policy and allow the law to take its course. Experts need to be engaged for introducing and implementing tax reforms. Unpopular tax reforms are needed to achieve documentation, which would generate tax revenue and thus minimise our reliance on foreign donors.