Mr. Shaukat Treen the financial advisor to GOP keeps saying that the tax to GDP ratio in Pakistan is only 9-10% which is too low and should be increased. He seems to forget that agriculture contributes 25% of Pakistan's GDP and agricultural income is not taxed. So the actual Tax/GDP ratio of taxed GDP is more like 12-14% which is higher than China, India, Bangladesh, Russia and perhaps even USA. Any further increase in the taxation of the industrial and services sectors would be simply criminal and counterproductive. After all Mr. Tareen is a highly respectd Banker but hardly an economist (which I am not either, but I try to get my sums right). Tax the agricultural income and all of Pakistan's economic woes will disappear. We might even become able to say "get lost" to Kerry-Lugar circus.
It is worth mentioning here that the actual government expenditure in Pakistan is over 20% of GDP including income from the giant state owned enterprizes; but offers none of the benefits enjoyed by the citizens of European countries with similar state expenditure ratio.
The reason why agricultural income is not taxed in Pakistan is that most of it goes into the pockets of a few dozen landlord families easily identified as Chaudhrys, Makhdooms, Sardars, Maliks and Pirs. Add to them the decendants of the knights and title holders of the British empire such as Bhuttos. Unfortunately for the peolple of Pakistan, these families also dominate the political scene and abort any initiative to tax agricultural income by conniving together and with military rulers.
Everywhere in the world the agricultural sector feeds the nation, but in Pakistan it fleeces and starves the nation with impunity.
