Published Date: Nov 30, 2013
Energy tax reforms vital for economic growth
Senator Nasreen Jalil, Chairperson, Standing Committee on Finance, has said that energy tax reforms are critical for sustained economic growth in the country.
She was speaking at a Policy Symposium on "Energy and tax reforms in Pakistan" organised by Sustainable Development Policy Institute (SDPI) here Friday. The senator said that taxes should be duly paid by citizens but there is a strong need for reforms in tax mechanisms and procedures to maintain revenue collection.
She emphasized that all exemptions and concessions allowed by the government should first be debated in Parliament. Dr Khaqaan Najeeb, Director General, Economic Reforms Unit at the Ministry of Finance, said that the government is aiming for a target of at least 15% for the Tax- GDP ratio. Audits and data mining will be improved in the country. He stressed need for reforms in Gencos (Generating Companies) in Pakistan. Line losses, which currently stand at 21% in the country, should be brought down to at least 16% and better regulation mechanisms are required to be adopted with regards to the energy sector.
Senator Mohsin Khan Leghari emphasised the need to revisit the direct tax regime since indirect taxes tend to bur- den the under-privileged. He also said that hydropower resources should now be adopted for energy generation in the country. Noman Ishtiaq, Adviser SDPI, said that rising debt to GDP ratio may become unsustainable. He said that the current SRO regime does not only cause revenue leakages but also adversely affecting custom lines as there are no legal requirements to document and report the value of these losses. He said that the tax compliance should be made as easy as possible for the tax payers.
Shahid Hussain, Member In- land Revenue Policy, FBR, said that focus should be on documentation of economy. He stressed that no SRO should be passed without parliamentary approval. Sakib Sherani, CEO, Macroeconomic Insights, said that organisational improvements are required in FBR to improve taxation mechanisms and recovery. Journalist Umar Cheema said that many parliamentarians are not registering with tax authorities or not paying their taxes.
Dr Musadik Malik, Special Assistant to Prime Minister, said that ballooning supply-demand gap, inevitable increase in power price, and theft in power transmission and distribution systems aggravated energy crisis. Owing to these challenges, resorting to coal may become necessary which in turn may be environmentally detrimental. He also said that there is need to get rid of hidden and cross-subsidies in the energy and power sectors.
Speaking about the province of Balochistan, Dr Kaiser Bengali, Adviser to the Chief Minister of Balochistan, said that up to half of the trade deficit of Pakistan is due to oil imports.
He observed that effective utilisation of railways would reduce the oil consumption as transport sector consumes most of the imported oil in Pakistan. While Thar coal may be important in meeting emerging energy needs, there is also need to develop infrastructure in the district, he said,
Saeed Ahmed Khan, Chairman, Oil and Gas Regulatory Authority, said that political favouritism is also contributing to the woes of the energy sector. He opined that private sector involvement would encourage the efficiency in gas sector.
Mohammed All, CEO of Engro Powergen, proposed a fair and competitive pricing structure which could help bridge the supply demand gap and also attract much needed investment.