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Traders, shopkeepers, and residents block roads and burn tyres and bushes during a protest against electricity loadshedding in Karachi, on May 27, 2024. — PPI
#Fear #doesnt #fill #coffers #global #lessons #FBR
In Greece (2010-2015), simplicity-powered tax increases and aggressive audit-IMF bailouts were implemented-backed fire. Public protests began, GDP signed a 25 % contract, 30 % of tax evasion GDP, and 250,000 small and medium -sized businesses (SMEs) closed due to increasing costs of compliance.
In Kenya (2015-2017), the Kenya Revenue Authority launched an aggressive audit and imposed heavy fines on SMEs to increase revenue. Backfire to this move. Traders reached the streets in protest, fear of harassing SMEs decreased by 20 %, and annual tax revenue declined by 5.0 %.
In Italy (2011-2014), the ‘Redditometro’ system tried to detect tax evasion by lifestyle-lifestyle-based car ownership-and heavy fines. The policy back fired. High network -owned people declined by 15 %, and 10,000 wealthy Italians were shifted to Switzerland, which is estimated to be 2 billion euros. The growing public reaction resulted in the suspension of the system in 2018.
In South Africa (2014-2018), the South African Revenue Service targeted aggressive audits and fines to overcome the fiscal deficit. Result: GDP growth decreased by only 0.8 %, and people with 30,000 high net migrants migrated.
In France (2012-2014), the French tax authority introduces 75 % of Superutics on annual income, with more than one million euros and the wealth tax audit has been accelerated. The policy back fired. Economic growth stopped at 0.5 %, while 42,000 million leaves left France, resulting in a loss of 60 billion euros in tax revenue.
In Nigeria (2017-2019), the Federal Inland Revenue Service began seizing bank accounts in an attempt to improve compliance. The point of view backfire. Public distrust increased, compliance increased by only 5.0 %, and 70 % targeted businesses were either closed or shutdown or Ghana – which caused a loss of 500 million millions in revenue.
In Norway (2022-2023), the Norwegian tax administration increased the wealth and profitable tax by 20 % targeting high network capable people. Backfire to this move. Business investment declined by 5.0 %, and 82 wealthy people – collectively moved to Switzerland – worth $ 4.3 billion, which reduced the state tax to 150 million.
Countries such as Greece, Kenya, Italy, South Africa, France, Nigeria and Norway show that excessive aggressive audits, account visits, or lifestyle implementation create fear and confidence. Yes, compliance pharmaceuticals, businesses are closed or informal, and revenue decreases, not increasing. The three most important lessons for the Federal Board of Revenue are: Lesson 1: Implementation should be firm but fair. Lesson 2: Targeting wealth very aggressively can mobilize the capital flight by damaging revenue and investment. Lesson 3: Avoid more pressure from business at strict economic hours. Doing so eliminates the risk and a reduction in long -term revenue.
The FBR should consider three important non -repression: Measure 1: Ease the tax system, after the UK’s tax digital action, which increased by 25 %. Measurement 2: Bureau technology, such as Estonia’s AI-powered, blockchain-based e-tax system, which in real time detects transactions-collects 500 million euros annually and increases compliance by 40 %. Measure 3: Increase tax concessions for SMEs and Startups, which have been modeling after Singapore’s startup tax, which formally made 70,000 businesses and produced $ 2 billion annually. To ensure, tax crackdown backfire. Yes, heavy -handed taxes from Greece to Nigeria are very high.
The author is a columnist based in Islamabad.
