Charter of the Economy Table 9.2: Perception of Taxpayers of the Tax System(IPP Survey of 1153 taxpayers) Corporate Taxpayers(%) Personal Taxpayers(%) Ranking of 1 st or 2 nd Ranking of 3 rd to 5 th Ranking of 1 st or 2 nd Ranking of 3 rd to 5 th • Too many exemptions and 32 68 42 58 concessions to privileged groups and sectors • Large-scale tax evasion by the 50 50 54 46 rich and powerful • Low tax compliance because of 40 60 34 66 perception of misuse of public funds by Government • Too much corruption by Tax 48 52 41 59 Officers • Absence of a simple and friendly tax system 30 70 29 71 Source: IPP The primary objective of the tax reform agenda must be to raise the tax-to-GDP ratio to 15 percent of the GDP by 2024-25 while making the tax system markedly more progressive. This section highlights first the extent of income and wealth inequalities in Pakistan. This is followed by identification of the tax breaks and concessions which currently the rich enjoy in Pakistan. This will indicate the key areas of reforms where tax expenditures are to be reduced and tax revenues correspondingly increased. 9.2. Level of Income and Wealth Inequality A vivid manifestation of inequality in the country is the share of income accruing to and the share of assets owned by the top 1 percent of the population. This is the so-called‘elite’. The latest estimates are presented in Figure 9.3. Almost 9 percent of the national income is pre-empted by the richest 1 percent of the population. They also own 16 percent of the wealth in the form of property owned. A striking statistic from the Agricultural Census of 2010 is that 1 percent of the largest farmers in Pakistan own as much as 22 percent of the farm area. Further, an illustration of the huge differential access to capital is that 1 percent of the largest borrowers pre-empt as much as 38 percent of the credit. A popular measure of the extent of income inequality is the modified PALMA ratio which derives the ratio of the income share of the 20 percent of the population to the share of the bottom 20 percent of the population. It is estimated at over 7 to 1 in Pakistan, as shown 92