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The Express Tribune

Published Date: Apr 27, 2017

Asad Umar calls for reduction in GST rates

With the government hedging its bets on the multibillion-dollar China-Pakistan Economic Corridor (CPEC) to spur economic prosperity, the focus should shift to indirect tax revenue collection system to boost growth.
This was stated by Pakistan Tehreek-e-Insaf (PTI) MNA Asad Umar during a pre-budget seminar in the capital held by the Sustainable Development Policy Institute (SDPI) on Wednesday. He stressed on the need to reduce the rate of general sales tax (GST) and focus on improving the tax collection system.
Umar lamented that the prevalent economic system in the country was actually designed to protect and benefit the influential and powerful. Hence, misplaced priorities and ill-conceived policies were causing the economy to sink.
He noted that the current account deficit of Pakistan was nearing $6.1 billion mark. Correspondingly, Pakistan’s exports had fallen.
Suggesting that anti-growth and anti-industrialisation taxation policies had slowed down economic activities in the country, he said that the government should decrease indirect taxes and bring GST rates down to 15%.
“Even international financial institutions have termed that disparity after a certain level was harmful to economic growth,” Umar said.
Having previously headed organisations such as Engro, Umar said prior to the elections in 2013, both the Pakistan Tehreek-e-Insaf (PTI) and Pakistan Muslim League-Nawaz (PML-N) had promised to reduce the GST.
After the elections, however, he said the incumbent government decided otherwise.
“The tax collection machinery in the country is extremely corrupt and needs to be made autonomous,” he said.
In response to various questions posed by the participants, Umar said that Pakistan needed development professionalism to ascertain the actual needs of the people.
He said that servicing large debts and heavy defence budget allocations left little for development expenditures. Therefore, he said, revenue collection needs to be enhanced by focusing on a direct tax strategy. He pointed to the abolishment of wealth tax in the country as another example of how policies were made to facilitate the elite.