Pakistan International Airlines (PIA), the national flag carrier, has found itself embroiled in a tax dispute as the Federal Board of Revenue (FBR) took the drastic step of freezing the airline’s bank accounts. This move comes at a critical time when the government has shifted the burden of revenue generation onto the general public, leading to growing concerns about the fairness of the taxation system.

According to the FBR, PIA owes approximately Rs2.8 billion in taxes. However, the airline disputes this figure, claiming that the amount owed stands around Rs1.3 billion. A PIA spokesperson confirmed the ongoing communication between the airline’s management and the FBR, expressing hope that the bank accounts would be unblocked in the near future.

Despite the harsh measure taken by the FBR, the PIA spokesperson reassured the public that the airline’s flight operations and other activities were continuing to function smoothly.

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The situation with PIA not paying taxes raises questions about the government’s tax collection policies. A recent report from the Finance Division revealed that government expenditure was on the rise in FY23, largely due to increased revenue collection through non-tax measures and indirect taxes. This indicates a failure to effectively broaden the tax base and implement direct taxation for various sectors.

Critics argue that the government’s approach seems to focus on imposing indirect taxes on the masses, while offering some protection to the wealthier classes, even amid the current financial crunch. The freezing of PIA’s bank accounts further reinforces this perception, leaving the public questioning the fairness of the taxation system.

Meanwhile, the report also highlighted that the government’s interest rate hikes policy is facing opposition, particularly from the business community. The State Bank of Pakistan has been unwilling to reverse the rate hikes, despite continuous protests and grave consequences faced by the public.

As the PIA tax dispute continues, the government is under pressure to address the broader issues surrounding taxation and revenue generation to create a more equitable and sustainable financial framework.