CSS 2020 Essay: Informal economy of Pakistan: the way forward

Written by Shamsher Ali Seelro (37th CTP)

Introduction:

Causes:

1. Corruption

2. Trust deficit

3. High tax rates

4. Loopholes in tax laws

5. Amnesty schemes

6. Illiteracy and complex system of taxation

7. Mafias in informal sector

8. Religious bent of mind

Impacts:

1. Revenue Loss

2. Dependency on foreign loans

3. Tax burden on formal sector

4. Burden of indirect taxes

5. Money laundering

Way forward:

1. Corruption eradication measures

2. Regular audit of bureaucrats and politicians

3. Training of tax officers

4. Broadening of tax net

5. Ban on Amnesty schemes

6. Documentation of economy

7. Promotion of e-commerce

8. Digital identity cards

9. Tax awareness measures