Published Date: May 24, 2011
ECONOMISTS SUGGEST WIDENING OF TAX REGIME
Former chief economist of Planning Commission of Pakistan Dr Pervez Tahir has said that institutions are unable to perform their assigned tasks and roles.
He was addressing a seminar on ‘Forthcoming Budget 2011-12: Opportunities and Challenges’ jointly organised by the Sustainable Development Policy Institute and ActionAid Pakistan here on Monday.
Recommending widening of tax regime, Dr. Pervez Tahir deplored that willingness or courage to improve the tax net was missing. He said the country has currently 2.4% growth rate involving 2.2% from services sector alone while the major sectors such as agriculture and industry were not contributing to this growth.
Dr. Syed Nazre Hyder, senior economic adviser at the SDPI, said that the country had never experienced such a grave economic situation and numerous challenges simultaneously before. He said that a few options are available to policy-makers to pull the economy out from the edge of abyss. He said that the fiscal deficit was much higher than its target, revenue collection was not only short of target but also formed lowest tax-GDP ratio as compared to other developing countries, heavy subsidies to public sector enterprises, heavy payment of inter-corporal debt, inflation, unanticipated expenditures on rehabilitation of displaced persons and rehabilitation and reconstruction of unprecedented flood-affected areas were some of the key challenges.
He, however, observed that despite all this, the data regarding current account balance and exports receipts seemed satisfactory.
Executive Director of Centre for Peace and Development Initiatives Mukhtar Ahmad Ali criticised low budgetary allocations for education and said that out of total less than 2% of education budget, 95% was allocated for salaries leaving very little resources for improving the quality of education. He regretted that gender disparities in education were not addressed, adding that out of 42 new colleges and other institutions built in 2008-09, only 8 were for women.
Former principal economic advisor of the Ministry of Finance Sakib Sherani said that there was no shortage of resources but the key challenge was efficient use of available resources. Talking of estimated cost of bad governance, he said that over Rs700 billion could be collected through widening of tax regime, Rs330 billion could be saved by addressing leakages and irregularities in public sector expenditures and power sector crisis was also costing 3.5% of the GDP.
He said that budget-makers should consider improving macroeconomic stability, tax burden sharing by powerful elites, social protection and keeping a deep sight of future challenges such as climate change, water crisis and debt-servicing.
Dr. Athar Maqsood Ahmed of the NUST and Hafiz Idrees from the Income Tax Bar Association also spoke on the occasion.