Contribution of Karachi in Tax - FBR Official numbers

[Kabira]

KARACHI:

Sindh Governor Muhammad Zubair questioned the popular claim that Karachi, the financial hub of the $270-billion economy, contributed 62% to the country’s total revenue, arguing that companies filed their tax returns from the provincial capital.


While admitting that Karachi contributed a huge chunk, Zubair, a close confidant of the PML-N leadership, said the percentage isn’t 62%.

“No doubt, Karachi contributes a big share, but not 62% of total revenue,” he remarked, arguing that many Karachi-based companies, although operating in the entire country and abroad, were filing returns from the provincial capital.

Thus, he explained, the figure labeled as the contribution from the port city actually had a revenue share from other areas of the country.

Responding to the complaint from Karachi Chamber of Commerce and Industry that Sindh, especially Karachi, was not getting its due share in the country’s resources, Zubair said that the share of each province was clearly defined in the National Finance Commission (NFC) Award.

“The provinces should spend in social and economic sectors forbetter life of their people,” he urged.

On a separate note, Zubair, who previously served as the Privatisation Commission chairman, emphasised that Karachi should showcase itself as the next destination for local and foreign investment.

“This city must keep its momentum, as a vibrant Karachi has proved very supportive for the rest of the country. In early decades of independence, Karachi’s momentum led Pakistan’s economy. It must re-gain its historic role in nation-building and socio-economic revolution.”
https://tribune.com.pk/story/1386432/zubair-says-karachis-contribution-tax-revenue-not-62/

 

[Kabira]

When will this myth die? Karachi actual contribution isn't more then it's GDP which is around 20% of Pakistan.

 

[Sugarcane]

When will this myth die? Karachi actual contribution isn't more then it's GDP which is around 20% of Pakistan.

Major chunk of GoP revenues is indirect taxes and duties i.e. GST FED on sales, so asking every provincial governments to collect the taxes and duties on goods and services being sold in province themselves will bring the figures closer to reality.

 

[DJ_Viper]

While admitting that Karachi contributed a huge chunk, Zubair, a close confidant of the PML-N leadership, said the percentage isn’t 62%.

“No doubt, Karachi contributes a big share, but not 62% of total revenue,” he remarked, arguing that many Karachi-based companies, although operating in the entire country and abroad, were filing returns from the provincial capital./

I am a little confused. How does a port city give out 60% of the taxes? Sure, it would have a bigger share of taxes compared to other cities because of the shipping and port related operations and associated taxation. But the stuff that is sent out and received at a port city isn't for itself. So even if among cities, a port city pays more taxes, but these taxes are for goods and services produced elsewhere in a country.

For example, Houston (its compared and named as Karachi's sister city), is one of the larger ports in the US. And so it would have a huge tax based compared to all other cities in Texas. But if the goods and services Houston port exports and imports weren't built in other places within and outside of Texas (Like Dallas, or other states like Oklahoma, Kansas, Arkansas, etc), what would you really send and receive from Houston? Nothing.

Houston by itself, just like Karachi, doesn't manufacturing anything. Its a port of entry and exist and has taxes applied to goods and services built by companies in other parts of the country. So this is a super false assumption that any port city pays 60% of the tax. About 70-80% of this tax is applicable to business and consumers sitting in non-port cities.

 

[Boomin' Bomber I.J.]

I am a little confused. How does a port city give out 60% of the taxes? Sure, it would have a bigger share of taxes compared to other cities because of the shipping and port related operations and associated taxation. But the stuff that is sent out and received at a port city isn't for itself. So even if among cities, a port city pays more taxes, but these taxes are for goods and services produced elsewhere in a country.

For example, Houston (its compared and named as Karachi's sister city), is one of the larger ports in the US. And so it would have a huge tax based compared to all other cities in Texas. But if the goods and services Houston port exports and imports weren't built in other places within and outside of Texas (Like Dallas, or other states like Oklahoma, Kansas, Arkansas, etc), what would you really send and receive from Houston? Nothing.

Houston by itself, just like Karachi, doesn't manufacturing anything. Its a port of entry and exist and has taxes applied to goods and services built by companies in other parts of the country. So this is a super false assumption that any port city pays 60% of the tax. About 70-80% of this tax is applicable to business and consumers sitting in non-port cities.

I do not think it is 60% now, but it used to be at least 50%. Reason was it used to be the only major industrial and commercial city of Pakistan, and also the only port. Unrest over the last 3 decades made many companies to shift up country, hence a big drop in the percentage of tax collection from before.

BTW, you cannot compare Karachi to Houston. There are many cities in the US as big or bigger than Houston. Karachi is not only the biggest city in Pakistan, with a population exceeding 25 million, it is also, by many estimates, the 2nd largest city in the world. It is more than ten times bigger than Houston. Houston, on the other hand is the oil capital of the world, so has it's own importance.

 

[Śakra]

Karachi is Pakistan's most important city, I don't understand why the lion's share of development isn't allocated for them. Why is Lahore getting a metro instead of Karachi? Why is Islamabad getting a new airport before Karachi?

 

[Boomin' Bomber I.J.]

....
Houston by itself, just like Karachi, doesn't manufacturing anything. Its a port of entry and exist and has taxes applied to goods and services built by companies in other parts of the country. So this is a super false assumption that any port city pays 60% of the tax. About 70-80% of this tax is applicable to business and consumers sitting in non-port cities.

I dunno about Houston, but who says Karachi does not manufacture anything? Even after creation of industrial estates upcountry, it is still the major industrial and commercial hub of Pakistan.

Karachi is Pakistan's most important city, I don't understand why the lion's share of development isn't allocated for them. Why is Lahore getting a metro instead of Karachi? Why is Islamabad getting a new airport before Karachi?

I do not want to go into politics, however, your reference to new airport is baseless. Karachi got the first modern airport in Pakistan back in 1992. Since the old airport was big enough, it only required a new terminal to be built. This is not the case with Islamabad. There was not enough space to expand the old airport, hence it is being constructed at a new site.

 

[DJ_Viper]

I dunno about Houston, but who says Karachi does not manufacture anything? Even after creation of industrial estates upcountry, it is still the major industrial and commercial hub of Pakistan..

Help me understand what's manufactured in Karachi vs. the remainder of the country! I'd love to see someone really trying to back up this stupid idea of one port city paying entire country's 60% taxes!

 

[Kabira]

I do not think it is 60% now, but it used to be at least 50%. Reason was it used to be the only major industrial and commercial city of Pakistan, and also the only port. Unrest over the last 3 decades made many companies to shift up country, hence a big drop in the percentage of tax collection from before.

BTW, you cannot compare Karachi to Houston. There are many cities in the US as big or bigger than Houston. Karachi is not only the biggest city in Pakistan, with a population exceeding 25 million, it is also, by many estimates, the 2nd largest city in the world. It is more than ten times bigger than Houston. Houston, on the other hand is the oil capital of the world, so has it's own importance.

Neither Karachi alone has consumer base or GDP to generate 60% or 50% of revenues. In 2011 entire Sindh share in Pakistan GDP was 27%, from that major chunk belonged to Karachi 20%.

 

[Nilgiri]

Neither Karachi alone has consumer base or GDP to generate 60% or 50% of revenues. In 2011 entire Sindh share in Pakistan GDP was 27%, from that major chunk belonged to Karachi 20%.

Its not really what revenue pattern spread is being generated in a country, its where its most easy for the govt to extract from that revenue. That's why you get some pretty lop sided numbers for Karachi and Bombay (and urban clusters in general, though ports are extra juicy) back in the day given the sheer presence of formalised economy relative to rest of the country. It has mitigated somewhat now probably in raw % terms, but its still probably a lot higher than whatever GDP footprint % they have nationally.

 

[MAB]

Karachi is Pakistan's most important city, I don't understand why the lion's share of development isn't allocated for them. Why is Lahore getting a metro instead of Karachi? Why is Islamabad getting a new airport before Karachi?

You can blame that on the provincial government, Lahore has developed because their provincial government actually spends money on their city. The federal government has very little to do with its emergence as even during PPP era Lahore was forging ahead. While in Karachi PPP couldn't give a hoot because almost all their votes come from rural Sindh.

 

[Imad.Khan]

You can blame that on the provincial government, Lahore has developed because their provincial government actually spends money on their city. The federal government has very little to do with its emergence as even during PPP era Lahore was forging ahead. While in Karachi PPP couldn't give a hoot because almost all their votes come from rural Sindh.

I think its wrong to say that PPP didn't care about Karachi because they don't get votes from there. The truth is that PPP doesn't care about anything, if they did care then atleast they would have done some development work in interior Sindh, but they havn't done anything anywhere.

 

[MAB]

I think its wrong to say that PPP didn't care about Karachi because they don't get votes from there. The truth is that PPP doesn't care about anything, if they did care then atleast they would have done some development work in interior Sindh, but they havn't done anything anywhere.

Yea that's true the 2008-2013 PPP government had to be the most corrupt government of all in Pakistan

 

[Boomin' Bomber I.J.]

Neither Karachi alone has consumer base or GDP to generate 60% or 50% of revenues. In 2011 entire Sindh share in Pakistan GDP was 27%, from that major chunk belonged to Karachi 20%.

Major portion of your produce is agricultural. Karachi is not an agricultural city, hence the lower share in GDP. We're not talking GDP here. Tell me how much tax does the agriculture sector contribute to the country?

Help me understand what's manufactured in Karachi vs. the remainder of the country! I'd love to see someone really trying to back up this stupid idea of one port city paying entire country's 60% taxes!

Read again... I did not support the 60% share theory; however, like it or not, Karachi generates the biggest chunk of national tax revenue when you compare it to any other city/area in the country.

 

[The Accountant]

Here are the official numbers of tax payments from different region of Pakistan where Karachi share is bigger than even complete Punjab