Pakistan’s tax code is inefficient, cumbersome, and enforced by a bloated bureaucracy, which is why the Islamabad-based Policy Research Institute of Market Economy (PRIME) has long advocated for a changed tax structure. PRIME’s most recent campaign, Aik Tax (“single tax”), advocates for a lower, flatter, and more predictable system of taxation that would unleash Pakistan’s entrepreneurial potential.
“We wish for a simple tax code in Pakistan,” explains PRIME’s head of marketing and communications Syed Ali. “The tax code in its present form is overly complex, loophole-ridden, regressive, and inhibits business innovation and growth. It does not raise the revenue required for the government to function. It practically punishes people for registering as tax filers.”
If the Aik Tax is implemented, PRIME says the country’s tax code would be easier to understand and be applied fairly to everyone. PRIME has proposed a 10 percent flat income tax, a 20 percent corporate tax, a 5 percent sales tax, a 5 percent customs duty, and no other taxes.
Pakistan currently has multiple tax collection agencies with varying jurisdictional areas. These agencies often duplicate collection efforts in some areas while completely disregarding others. Filing taxes to multiple organizations makes paying and processing those taxes unnecessarily complex, attributing to the high volume of tax evasion (both intentional and unintentional) that plagues Pakistan’s system.
“We are trying to build consensus between civil society, academia, the business community, and government on the direction of tax reform,” continued Ali. “Our tax reform proposal, which is currently under review by a committee of the federal government, promises to double revenue collections within a span of two years, by reducing tax rates and by reducing the number of taxes."
PRIME has also created a YouTube video playlist to educate people about inefficiencies of the Pakistan’s tax system. The videos explain how PRIME’s proposed Aik Tax would simplify how people file their taxes and reduce how much they have to pay, and advocate for more transparency in how the government spends its tax revenue.