Economic direction is good, but pace of reforms is slow
\n Islamabad
\nBusiness leader and former President of the Islamabad Chamber of Commerce and Industry (ICCI), Dr. Shahid Rasheed Butt, said on Monday that global institutions are supporting Pakistan\u2019s economic policies and that the world\u2019s perception of Pakistan is changing.
\nAlthough Pakistan\u2019s economic indicators are improving, he stressed the urgent need to reduce reliance on aid and loans.
\nHe added that different countries that used to avoid Pakistan due to economic and other considerations would soon start bilateral trade and investment in Pakistan.
\nShahid Rasheed Butt said in a statement issued here today that the economy is stabilising and pushing the country forward while the stock market is booming.
\nThe business leader stated that the country\u2019s exports had increased by 14% and that digitizing the FBR is expensive, but it will benefit the economy greatly.
\nHe demanded the completion of talks to privatize Pakistan International Airlines and other state-owned businesses, with the aim of selling these failing enterprises to save billions of rupees.
\nIn Pakistan, the number of filers is increasing, and the time has come to bring untaxed and low-taxed sectors, as well as wealthy individuals, into the tax net.
\nHowever, he said, there is an urgent need to broaden the tax net, as the government is currently spending seventy percent of revenue to pay interest on loans, which is not sustainable.
\nHe emphasized that Pakistan\u2019s tax system is ineffective, unfair, fragmented, and leaves out entire sectors of the economy, which exacerbates structural economic imbalances and is a recipe for disaster.
\nHe noted that Pakistan has been unable to expand taxation. Despite several local and donor-supported reform attempts, the tax-to-GDP ratio continues to hover around 10% of the GDP. The inability to expand tax revenue contributes to significant public service delivery gaps.
\nIn Pakistan, over 20 million people lack access to clean water, nearly one in three people lacks a decent toilet, approximately 40% of children under the age of five experience stunted growth, and more children are not attending school than in India and China, he lamented.
\nBorrowing cannot improve the situation; therefore, an expanded tax net is necessary. The elites are not prepared to pay taxes, but Pakistan has no other choice, he noted.
\nCurrently, the government is providing power subsidies, lowering the cost of basic goods, and slashing the price of fuel, offering some respite to the people. However, the scarcity of resources prevents further action.
\nBy skewing the tax system towards import and consumption taxes, Pakistan worsens its structural economic imbalances. Pakistani firms, for example, are more incentivised to sell domestically to a protected market than to compete globally.
\nThese imbalances are further exacerbated by the undertaxation of agricultural income, urban properties, and retailers. By undertaxing properties, Pakistan\u2019s tax system incentivises firms and households to invest in urban property as opposed to sectors that may provide employment and generate exportable goods or services.
\nAccording to a study, with a population of over 100 million, all of Punjab in Pakistan collects less urban property tax than Chennai in India, which is home to about 10 million people. The agriculture sector is also undertaxed. Agriculture contributes to nearly one fifth of the GDP; it accounts for less than 1% of national tax revenue, he explained.
\nHe said that research by the World Bank shows that a 10% import duty in Pakistan increases profits from selling domestically compared to exporting. This feeds into Pakistan\u2019s structural challenge of low exports, which are the core of its frequent balance of payments crises.
\nHe said that the Chief Ministers of all provinces should focus on giving people better health care, schooling, and other services, and avoid useless protests that only harm common people.
\nMr. Butt said that the Shanghai Cooperation Organisation meeting must go as planned, and no one should be allowed to make things worse in the country.<\/p>\n","protected":false},"excerpt":{"rendered":"
Economic direction is good, but pace of reforms is slow Islamabad Business leader and former President of the Islamabad Chamber of Commerce and Industry (ICCI), Dr. Shahid Rasheed Butt, said on Monday that global institutions are supporting Pakistan\u2019s economic policies and that the world\u2019s perception of Pakistan is changing. Although Pakistan\u2019s economic indicators are improving, […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-435923","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"\n