Pakistan has long been in the list of lower middle income countries and is in a process to break the barriers of poverty and enter the club of the developed nations. Instead of taking extrovert approach, as most of the developed nations do, the economy of the country is introvert. Pakistan is remarkably an industrial country with strong cottage industry. It produces goods and services worth billions of rupees annually but the local made products are mostly consumed in the local market. The growth of population has worked as a catalyst to give impetus to the development of cottage and subsidiary industries. Most of the manufacturers have little or no access to the world markets and they are obliged to sell their goods and services in the local markets at the cheapest rates.
A global financial services company, Credit Suisse, in its Global Wealth Report 2015 reveals that Pakistan has the 18th largest middle class population in the world consisting of over 6.27 million individuals. The middle class consists of 14 percent adults worldwide, holding 32 percent of wealth. However, the share of middle class adults in Pakistan is 5.7 percent in the adult population of 111 million. The middle class consists of 108.7 million individuals in China, 91.8 million in the United States and 62 million in Japan. The share of middle class in India is 3 percent and Australia 66 percent. In the United States, the Credit Suisse considers an adult part of the middle class having wealth between $50,000 and $500,000. However, threshold for Pakistani middle class is $14,413 due to lower per-capita income and lower prices of commodities in the country as the Credit Suisse uses the Purchasing Power Parity set by the International Monetary Fund to derive equivalent middle class wealth in local terms. The report says that a Pakistani adult can be considered part of the middle class having wealth between Rs 1.5 million and Rs 15 million with 104 rupees a dollar conversion rate. According to Credit Suisse, Pakistan’s GDP is $495 billion which was $170 billion in 2000, showing an annual growth rate of 7.4 percent in 15 years.
The government is trying to broaden tax net without realizing the ground realities. More industrial growth and services will automatically generate more revenues and more taxes. But the government is obliged to take coercive measures to meet the IMF targets and that also without offering any incentives to the business community. A taxpayer is treated with respect, honour and dignity in every government office in developed societies, but he is harassed and even demoralized at the official and private levels in Pakistan.