Why is the Salaried class paying more taxes?

Mustafa Munawer

10 Sept 202403:48

Summary

TLDRThe video script discusses the burden of increased taxes on individuals in Pakistan, particularly those working for multinationals, banks, or other companies. It contrasts the situation with India, highlighting the lower tax collection efficiency in Pakistan's provinces compared to Indian states. The script points out the irony of Pakistan's Punjab province, which despite having a significant revenue authority, contributes a meager amount to the federal tax collection. It also mentions the higher tax collections by entities like the New Delhi Municipal Corporation and the Uddisa state in India, emphasizing the need for tax reforms and efficient tax collection to alleviate the tax burden on citizens.

Takeaways

😣 The speaker feels a heavy tax burden due to the economic conditions in Pakistan.
💼 Post the last budget, there's been an increase in taxes for those working in multinationals, banks, or other companies.
📉 Provincial tax collection in Pakistan is significantly lower compared to India, with only 85% collection versus approximately 35% in India.
🏆 Haryana, a state in India, collects 87% of its tax revenue and contributes only 13% to the central government, while Punjab, the largest province in Pakistan, needs 88.1% of its revenue for itself.
🚀 The revenue authority in Punjab, Pakistan, collected 240 billion rupees in a fiscal year, whereas the Indian state of Uttar Pradesh, with half the population, collected over 3500 billion rupees.
🏙️ The New Delhi Municipal Corporation collected over 126 billion Pakistani rupees in taxes and fees in a fiscal year.
📉 Despite the 18th amendment granting more autonomy, provinces in Pakistan are not performing well in tax collection.
💸 The speaker suggests that the central government relies heavily on the provinces for tax revenue, which is not being collected efficiently.
📈 There's a call for increasing direct taxes on agriculture income, which is a significant move under IMF pressure.
🏠 The speaker metaphorically compares Pakistan to a household where the father is burdened with debt due to his actions, and the younger generation prefers to ask for money instead of working.

Q & A

Why does the speaker feel that salaried employees are unfairly taxed?
-The speaker believes salaried employees are unfairly taxed because despite contributing significantly, provinces are not collecting sufficient taxes from other sources like agricultural income.
What is the tax collection issue in Pakistani provinces, according to the video?
-Pakistani provinces are not serious about collecting taxes, relying heavily on federal funds instead of generating their own revenue, despite having the authority after the 18th amendment.
How does Punjab's tax revenue compare with that of the Indian state of Odisha?
-Punjab collects only 240 billion Pakistani rupees, whereas Odisha, with a third of Punjab’s population, collects over 3,500 billion Pakistani rupees, 14.5 times more.
What is the comparison between Pakistan's provinces and Indian states in terms of tax collection?
-Pakistani provinces contribute only 8.5% to total tax collection, while Indian states like Haryana collect 87% of their own tax revenue and depend less on federal funds.
Why do the speaker's comparisons focus on Indian states like Haryana and Odisha?
-The speaker uses these comparisons to highlight how even less populous and less wealthy Indian states outperform Pakistani provinces in terms of tax collection and self-sufficiency.
What is the role of the 18th amendment in Pakistan’s provincial tax collection?
-The 18th amendment gave more powers to the provinces, including tax collection responsibilities, but provinces have not effectively utilized these powers to generate significant revenue.
What is the significance of agricultural income tax in this discussion?
-Agricultural income tax, which is under provincial jurisdiction, remains underutilized despite provinces having the legal framework to collect it. For example, Sindh barely collects any tax from its large agricultural sector.
Why does the speaker criticize provincial governments in Pakistan?
-The speaker criticizes provincial governments for not taking responsibility for generating revenue through tax collection and instead depending on federal support.
How does the speaker describe the relationship between the federal government and provinces in Pakistan?
-The speaker compares the relationship to a household where the father is in debt, and the grown sons demand more money without contributing to the household, reflecting the provinces’ dependence on federal funds.
What does the speaker suggest is the future of Pakistan if the current tax collection system remains unchanged?
-The speaker suggests that if provinces continue relying on federal funds without generating their own revenue, Pakistan will face an uncertain and potentially bleak future, with many attempting to escape the 'sinking ship.'

Outlines

00:00

📊 Tax Burden and Economic Struggles in Pakistan

The paragraph discusses the increased tax burden on individuals in Pakistan, particularly those working for multinationals, banks, or other companies. It highlights the contrast between the tax collection efficiency of Pakistan and India, with Pakistan's provinces only managing to collect 85% of their tax revenue compared to India's 35%. The speaker points out the irony that despite being a province with a significant population, Punjab in Pakistan struggles to meet its tax obligations to the federal government, collecting only ₹1 in tax for every ₹1 of income. The paragraph also compares the tax collection capabilities of the Indian state of Haryana and the city of Ujjain to that of Punjab, showing a stark difference in economic performance and tax collection. The speaker concludes by suggesting that the tax burden on individuals is high because the government is not effectively collecting taxes from businesses and the wealthy, leading to a situation where the common people bear the brunt of the tax collection shortfall.

Mindmap

Keywords

💡Taxes

Taxes refer to the compulsory financial charge levied by a government on workers and businesses to fund public expenditures. In the video, the speaker discusses how the tax burden has increased on individuals post the last budget, particularly in Pakistan. The script mentions how the provincial tax collection is insufficient, leading to a heavier tax load on citizens.

💡Multinationals

Multinationals are large companies that operate in multiple countries. The script implies that multinationals and banks might be contributing to the tax burden on individuals by not paying their fair share, which is a common critique in discussions about tax justice and economic inequality.

💡Budget

A budget is a financial plan that outlines government revenues and expenditures for a particular period. The video script mentions the 'last budget' as a point in time after which the tax burden on individuals increased, indicating that budget decisions significantly impact taxpayers.

💡Provincial Taxes

Provincial taxes refer to the taxes collected by sub-national governments, such as states or provinces. The script discusses how provinces in Pakistan are struggling to meet their tax collection targets, which affects the overall fiscal health and the tax burden on residents.

💡Economic Survey

An economic survey is a comprehensive analysis of a country's economic performance. The video references the economic survey to highlight the tax collection efficiency of provinces in Pakistan, comparing it unfavorably to that of India, to underscore the fiscal challenges faced by the country.

💡Revenue Authority

A revenue authority is a government agency responsible for the administration of taxes and the collection of government revenue. The script mentions the Revenue Authority in the context of tax collection in Punjab, Pakistan, emphasizing the gap between the potential and actual tax revenue.

💡Tax Collection Efficiency

Tax collection efficiency refers to how effectively a government collects taxes relative to its potential. The video script uses this concept to critique the tax collection efforts in Pakistan, suggesting that there is significant room for improvement.

💡IMF

The International Monetary Fund (IMF) is an international organization that offers financial assistance to countries to stabilize their economies. The script mentions the IMF in the context of Pakistan's economic situation, implying that the country's reliance on IMF loans has led to increased tax burdens.

💡Tax to GDP Ratio

The tax to GDP ratio is a measure of the size of the tax burden relative to the size of the economy. The video uses this ratio to compare the tax burden in Pakistan with that in India, highlighting the disparity and the heavier tax burden on individuals in Pakistan.

💡Indirect Taxes

Indirect taxes are taxes that are not paid directly by the person who ultimately bears the cost, such as sales tax or value-added tax. The script suggests that the pressure to increase indirect taxes is growing, which can affect the general population's purchasing power and living standards.

💡Debt Burden

Debt burden refers to the total amount of debt a country, company, or individual owes. In the video, the speaker uses the metaphor of a household to describe how the debt burden has been passed down to younger generations, who are now struggling under the weight of this inherited financial obligation.

Highlights

The tax burden on individuals in Pakistan has increased due to the economic challenges faced by the country.

Multinationals and banks contribute less to tax revenue, shifting the burden onto individuals.

Provincial tax collection in Pakistan is significantly lower compared to India, with only 85% collection versus India's 35%.

Haryana, a state in India, collects 87% of its tax revenue and contributes only 13% to the central government.

Punjab, the largest province in Pakistan, has a tax requirement of 88.1% of its own revenue, indicating a heavy reliance on central assistance.

The revenue authority in Punjab collected 240 billion rupees in the fiscal year, a stark contrast to the collections in Indian states.

Uttar Pradesh, a state in India with half the population of Punjab, collected over 3500 billion rupees, 14.5 times more than Punjab.

The New Delhi Municipal Corporation collected 126 billion rupees in taxes and fees, highlighting the disparity in revenue collection.

Despite the 18th amendment granting more fiscal autonomy, provinces in Pakistan struggle to collect taxes efficiently.

Sindh, a province in Pakistan, fails to collect even one billion rupees in tax revenue on its own, despite having a standing army.

The central government in Pakistan collects 375 billion in taxes from salaried individuals.

The IMF's pressure has led to an increase in indirect taxes, which disproportionately affects the general public.

The actual income of the people is not increasing despite the increase in indirect tax percentages.

Pakistan is likened to a household where the father is burdened with debt due to his actions, and the children demand money from him instead of working.

The video suggests that every sensible person should try to escape from this sinking ship, referring to the economic situation in Pakistan.