Breaking News - IMRAN KHAN STARTED WAR AGAINST TAXES

[VCheng]

well if you start talking about inputs etc., in economics everything has an indirect effect on everything. but the question is how much will the effect be?

according to an exercise done by Finance Ministry and FBR, there will only be 0.63% increase in inflation.

however, negative reporting is fuelling the inflation expectations which will exacerbate the situation.

Let's agree on some definitions if we are to dicsuss this further:

From Wikipedia:

The term direct tax generally means a tax paid directly to the government by the persons on whom it is imposed.

The term indirect tax has more than one meaning.

In the colloquial sense, an indirect tax (such as sales tax, a specific tax [a tax per unit], value added tax (VAT), or goods and services tax (GST)) is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the customer). The intermediary later files a tax return and forwards the tax proceeds to government with the return.

In this sense, the term indirect tax is contrasted with a direct tax which is collected directly by government from the persons (legal or natural) on which it is imposed.

Some commentators have argued that "a direct tax is one that cannot be shifted by the taxpayer to someone else, whereas an indirect tax can be."

An indirect tax may increase the price of a good so that consumers are actually paying the tax by paying more for the products. Examples would be fuel, liquor, and cigarette taxes. An excise duty on motor cars is paid in the first instance by the manufacturer of the cars; ultimately the manufacturer transfers the burden of this duty to the buyer of the car in form of a higher price.

Thus, an indirect tax is such which can be shifted or passed on.

The degree to which the burden of a tax is shifted determines whether a tax is primarily direct or primarily indirect. This is a function of the relative elasticity of the supply and demand of the goods or services being taxes.

Under this definition, even income taxes may be indirect. For example, if the supply of surgeons is tightly regulated, and income tax rates for high income earners are increased, if their fees do not change, surgeons might be inclined to work fewer hours and enjoy more leisure time. But if receiving surgery is a matter of life and death, in a free market, patients will bid up surgeons' fees, thereby drawing surgeons from their leisure and back into the operating room.

The incidence of the income tax will therefore shifted from the surgeons to patients, and the income tax in this example turns out to be an indirect tax.

 

[ajpirzada]

indirect tax cannot be called direct tax under any situation.

just bec indirect taxes can be passed on to the consumer, which they always do, it does not become a direct tax. its nature is still indirect (which is why the name 'indirect tax').

yes elasticities play a role in determining how much of the indirect tax will be passed on to the consumer.

 

[VCheng]

indirect tax cannot be called direct tax under any situation.

just bec indirect taxes can be passed on to the consumer, which they always do, it does not become a direct tax. its nature is still indirect (which is why the name 'indirect tax').

yes elasticities play a role in determining how much of the indirect tax will be passed on to the consumer.

I agree with you here.

In Pakistan, there are three major problems with the taxation system:

1. Not all income is taxed.

2. This contributes to the reliance on a much greater percentage of indirect vs direct taxes, along with a huge black economy that is taxable only indirectly, plus some other factors.

3. The tax collected is misappropriated at the point of collection, and then again and again along its path of utilization.

 

[ajpirzada]

I agree with you here.

In Pakistan, there are three major problems with the taxation system:

1. Not all income is taxed.

2. This contributes to the reliance on a much greater percentage of indirect vs direct taxes, along with a huge black economy that is taxable only indirectly, plus some other factors.

3. The tax collected is misappropriated at the point of collection, and then again and again along its path of utilization.

yes. agreed.

and if successful, RGST will atleast solve the problem of misappropriation. bec it will be levied at every stage and not only in the end, it will create a self regulatory system which will not allow anyone to cheat.

eg: person selling cotton thread and one buying it will both have to report the value of traded product to make sure that they dont end up paying more in taxation. one selling it would lik to give a minimum value, while the one buying it would like to state a maximum value. this creates a self check environment which is currently not there.

 

[VCheng]

yes. agreed.

and if successful, RGST will atleast solve the problem of misappropriation. bec it will be levied at every stage and not only in the end, it will create a self regulatory system which will not allow anyone to cheat.

eg: person selling cotton thread and one buying it will both have to report the value of traded product to make sure that they dont end up paying more in taxation. one selling it would lik to give a minimum value, while the one buying it would like to state a maximum value. this creates a self check environment which is currently not there.

What you state is the real hidden goal of a VAT such as the RGST: to create documentation of all economic activity.

However, businessmen in Pakistan are apt to keep two sets of books, one real and one for the taxman.

If it succeeds in Pakistan, it will help greatly. If it doesn't it will be a pity indeed.

 

[Jungibaaz]

I hope you were being sarcastic.

Increasing taxes, slows economy, increases deficit, increases inflation, it is a vicious circle.

You can not keep increasing taxes indefinitely on people without cutting expenditure.

I was not joking....

Those are the consequences of too many taxes, in Pakistan tax collection is low very low compared other countries.

I know for a fact that if taxes decreased here in the UK, the education, health and benefits system etc would fall apart.

 

[Jungibaaz]

Nearly 600 billion rupee is going down the drain every year because of corruption in major National Institutions.. could Government not have saved some of the leakages instead of imposing new taxes? We need more taxes not on the people who are already paying enough, but on the people who do not give taxes yet and those are elite of the country.

GST or Reformed GST will put 25% more burden on the poor which will be devastating for the majority of people in Pakistan. Tax Real-estate and Agriculture which earn huge deal of money and return the Nation nothing and put a full-stop to corruption to generate needed revenue for the sate and debt-servicing.

Join Imran Khan - the Hope for a better Pakistan.

ok fair enough... never pay taxes again...

see what you get out of it...

yes tax payers money is being wasted, but boycotting all taxes is absurd and unnecessary.

 

[Jungibaaz]

Right , but President and Prime minister and all MPA and MNA should first give tax .

let me get this straight?

You are worried that your taxes are being used wrong.

so instead of trying to deal with corruption and make it so that your taxes are used correctly, you would much rather not pay the taxes at all.

 

[BATMAN]

In last three years politicians and civil servants have sent tons of capital abroad.
Started businesses and bought properties in UK, France, Spain, UAE and US.
Now whom are we trying to tax?
We need to bring back the state capital stolen by politicians and corrupt civil servants.

 

[black_magic pk]

i think instead of taxing zardari should cut his state sponcered foreign tours and make tours on his own budget, we dont pay zardari so that he can take his children to holidays..

 

[Materialistic]

we need to collect more taxes! not get rid of them!

It takes money to make money!

We need to increase the size of our tax net & bring reforms in tax collection methods, to increase revenue rather then pressing down those who are already paying taxes for the sake of who are not.

 

[pak-marine]

so what is Mr khans plan except he is trying to do a publicity stunt .. this guy changes his mind like any thing

 

[waraich66]

My suggestions .


1. GOP should declare minimum 10 Tax free zones for 10 years to attract foreign investment.
2. Upto 12000 US$ annual income shall be declared tax free .
3.Property Tax shall be 40% per year
4.Agriculture land should be exempt from Tax.
5.Defense budget should be reduced to 50%.
6.WAPDA,PTCL,PIA,STEEL MILLS , LDA,CDA,KDA,PSO all should privatized, we can generate 100 Billion dollars which can be invested in infrastructure, education and Health sector development.
7. Kalabag Dam, Bhasha Dam, Nuke Power Plant should be built in next five years.
8.Minimum salary of skill worker shall be 10 dollar per hour.
9.Child allowance of 500 Dollar per month shall be provided for 18 year of age .
10. Free and Fair justice system.

Pakistan can emerge as economic super power in next 10 years.

 

[VCheng]

My suggestions .


1. GOP should declare minimum 10 Tax free zones for 10 years to attract foreign investment.
2. Upto 12000 US$ annual income shall be declared tax free .
3.Property Tax shall be 40% per year
4.Agriculture land should be exempt from Tax.
5.Defense budget should be reduced to 50%.
6.WAPDA,PTCL,PIA,STEEL MILLS , LDA,CDA,KDA,PSO all should privatized, we can generate 100 Billion dollars which can be invested in infrastructure, education and Health sector development.
7. Kalabag Dam, Bhasha Dam, Nuke Power Plant should be built in next five years.
8.Minimum salary of skill worker shall be 10 dollar per hour.
9.Child allowance of 500 Dollar per month shall be provided for 18 year of age .
10. Free and Fair justice system.

Pakistan can emerge as economic super power in next 10 years.

Your suggestions are unimplementable, except for #4 which is already in place.

 

[waraich66]

Your suggestions are unimplementable, except for #4 which is already in place.

Why? please explain?