Provinces don't collect taxes and federation is in loss by giving money to provinces: Miftah

Miftah Ismail, a prominent Pakistani economist and former Minister of Finance, recently expressed his concerns about the current fiscal situation of the country. According to Ismail, the provinces in Pakistan are not collecting enough taxes, and as a result, the federation is facing significant losses in providing financial support to these provinces.

Ismail's remarks come at a time when Pakistan's economy is facing numerous challenges, including a high debt burden, low tax revenue, and a growing fiscal deficit. These challenges have been exacerbated by the COVID-19 pandemic, which has had a significant impact on the country's economy.

Ismail, who has previously served as the Chairman of the Board of Investment in Pakistan and as an advisor to the Ministry of Finance, argues that the federal government is currently bearing the brunt of the fiscal burden in the country. He believes that the provinces are not doing enough to collect taxes, and as a result, the federation is forced to provide financial support to these provinces.

Provinces don't collect taxes and the federation is at loss by giving money to provinces: Miftah

In a recent interview, Ismail stated that "The provinces are not collecting their due share of taxes, and this is putting a burden on the federation. The federation is giving money to the provinces, but the provinces are not collecting enough taxes to contribute to the national exchequer."

Ismail's concerns are not unfounded. According to recent data, the tax-to-GDP ratio in Pakistan is among the lowest in the world, with only a small percentage of the population paying taxes. This has led to a situation where the federal government is forced to rely on borrowing to finance its expenditures, which has resulted in a high debt burden.

In addition, the provinces in Pakistan are responsible for collecting various types of taxes, including sales tax, property tax, and agriculture tax. However, the collection of these taxes has been slow, and many provinces have been unable to meet their revenue targets. This has resulted in a situation where the federal government has to provide financial support to these provinces, which puts a strain on the national exchequer.

Ismail argues that the provinces need to do more to collect taxes and contribute to the national exchequer. He believes that the federal government should also take steps to encourage the provinces to collect more taxes, such as providing incentives or imposing penalties for non-compliance.

Ismail's comments have sparked a debate about the fiscal situation in Pakistan and the role of the provinces in contributing to the national exchequer. Some analysts have argued that the federal government needs to take a more active role in encouraging the provinces to collect taxes, while others believe that the provinces need to take more responsibility for their fiscal affairs.

Regardless of the specific policy solutions, it is clear that Pakistan's fiscal situation is in a precarious state, and action needs to be taken to address the growing fiscal deficit and debt burden. The current situation is unsustainable, and without significant reforms, it is unlikely that the country will be able to achieve long-term economic growth and stability.

In conclusion, Miftah Ismail's concerns about the fiscal situation in Pakistan highlight the need for greater fiscal responsibility and reform in the country. The provinces need to do more to collect taxes and contribute to the national exchequer, while the federal government needs to take a more active role in encouraging and supporting these efforts. Only through collective action and responsible fiscal management can Pakistan achieve sustainable economic growth and stability.