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Importance of Uniform Tax Policy

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A uniform tax policy is critical for a country because it promotes fairness, transparency, and economic stability. When tax policies are consistent and applied equally across all regions and sectors, they help create a level playing field for businesses and individuals. This can prevent tax evasion, smuggling, and other illicit activities that could undermine the economy. Additionally, a uniform tax policy fosters trust in the government and its financial management, which is essential for attracting investment and promoting economic growth. Overall, a uniform tax policy contributes to a more equitable and sustainable economic environment.

After facing continuous pressure from the business and industry sectors, the government has firmly decided against extending tax and duty exemptions for the ex-FATA and PATA regions. Finance Minister Mohammad Aurangzeb confirmed this decision in the parliament, stating that there were no plans to introduce legislation to extend the exemptions, particularly after all chambers of commerce and industry emphasized the need for a level playing field across the country.

Originally, these exemptions were introduced as a one-time, five-year incentive at the time of the merger of the tribal areas with Khyber Pakhtunkhwa (KP). However, they were extended for an additional year, leading to widespread abuse through smuggling activities that evaded sales tax in settled areas.

Local industry has continuously voiced concerns that up to 90 per cent of steel and 30 per cent of cooking oil produced in former FATA and PATA areas is illicitly transported to other parts of the country. This practice has severely undermined local businesses and industries, contradicting the intended purpose of the exemptions.

Unsurprisingly, legislators in KP are resistant to ending the tax and duty exemptions, fueling suspicions that they prioritize the interests of powerful individuals over the economic well-being of the region. However, the finance minister at the federal level likely understands the imminent risk of economic collapse. While ongoing efforts to secure another IMF program may temporarily avert a default, the underlying issues will persist until local industries can thrive independently.

Despite the undeniable hardships faced by the former tribal areas, it is unjustifiable to jeopardize the entire country’s economy to benefit a few unscrupulous factory owners. This flawed practice has fostered unfair competition, undermined legitimate tax-paying businesses, and inflicted significant revenue losses on producers and the government.

The government’s decision to discontinue the tax and duty exemptions must be upheld. While it is important to address the genuine grievances of representatives from the old tribal areas through appropriate channels, these efforts should not be allowed to further harm the economy, which has already suffered substantial financial losses.

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