Published Date: Jun 19, 2014
SDPI Press Release (19 June 2014)
Minister for Commerce Khurram Dastagir Khan has said that taxation
plays a major role to mobilize internal movement of transactions,
however, the government is trying to get rid of more taxes.
speaking at the National Consultation on Budget 2014 organized by the
Sustainable Development Policy Institute here the other day.
reforms are the fundamental steps taken by our government, he said,
adding “we intend to remove SROs in the upcoming years. He hoped that in
the next two years, there would be much more aggressive removal of
The Minister further said that FBR is not an evil in structure
but the government needs to generate more revenues to cope with the
requirements of economy.
He lamented that during the country’s
66-year history, the gap between legal structure of the economy and the
economy that exists on ground could not be bridged.
“Pakistan is one
of the taxpaying nations in the world where millions of people pay taxes
in terms of utility bills,” he maintained.
Dr Abid Suleri, the
Executive director of SDPI, stressed the need to analyze finance budget
and finance bill separately. “We usually go for the expenditure side of
the fiscal policy first, and then see the revenue side, he said.
companies’ registration with FBR, he said that only 38% companies are
the tax-compliers while 62% did not even submit their tax returns. OGDCL
is currently the top taxpayer in Pakistan followed by PSO, which pay
25% of the direct taxes. He maintained that 222 companies pay one-third
of the direct revenues. Terming the FBR tax reforms as the worst
reforms, Mr Suleri said the common man is badly affected due to
inefficiency of the FBR. He said the lower and lower middle classes will
have to bear the burden of indirect taxes, and there is no relief for
the two in the current budget. He also stressed the need to bring
retail sector in the tax-net.
PPP Senator Saeed Ghani said the
government performance is not satisfactory in terms of GDP, circular
debt, and other macroeconomic indicators. He accused the government of
siding with specific industrialist group or sectors. Regarding increase
in electricity cost, he warned the government that this action may lead
to electricity theft.
Rehan Hashmi MNA MQM pointed out that in
Pakistan, data comes from the State Bank and Federal Bureau of
Statistics but there is no uniformity in the values of these sources.
Customs department is responsible to curb illegal trade, but this
department is collecting revenue instead, he said. He stressed the need
to abolish SRO culture and focus on the SMEs. The current budget does
not focus the industrial sector, he said, emphasizing upon the need to
bring heavy investments in the country.
Mr Hashmi said MQM always
talked about land reforms, as this is the only way to prosper. “We must
follow the model of South Korea if we need to rapidly grow, which first
brought about land reforms, then divided districts and tehsils into
small units for good governance, and on top of it they promoted trade
and economy through SMEs”, he concluded.
Shaban Khalid, the
President of Islamabad Chamber of Commerce and Industry, said that
services sector contributes 18% to the GDP while 73% to the tax
collection, which is totally injustice and unfair. About 44% of the
labour force is employed in agriculture but its contribution to the GDP
is only 24%, he added.
He said some of the SROs are the need of hour
while individual SROs are a burden on the economy. Almost Rs 500-600
billion is dished out to keep non performing state enterprises alive,
such as Pakistan Steels, etc.
Ayla Majid, the Chief Executive of
CAMCO, said that tax to GDP ratio is less than 10%. Infrastructure and
energy have been given major share in the federal budget while education
and health have been ignored, she said and added that though it is
really good to spend more on infrastructure and energy, it would merely
impact the population indirectly.
She said: “We need to see where the debt is being spent. Debt money should be used effectively.”
for privatization and reduction in subsidies to the loss making
organizations, she said Rs 500-600 billion leakages from the budget goes
to the big organizations like Railways, and PIA.
Stressing the need
to incentivize businesses, she said there should be a level playing
field and the government should rely less on indirect taxes, while
direct taxes should be the focus for increasing tax to GDP ratio.
Salman, the Executive Director of PRIME, said budgetary allocations for
the federal government are almost consistent from 2010-11 to 1014-15,
which gives the message that either we don’t have choice or we don’t
have any priorities. He demanded to implement Fiscal Responsibility and
Debt Limitation Act 2005, and bring revenue deficit to nil.
Sherani, the Chief Executive of Macro Economic Insights, said the
country’s economy is operating in a debt trap. He said there is an
eight-fold increase in public debt from the financial year 2004-05 to
date whereas per capita debt is above Rs 900,000. He said debt servicing
as a percentage of net revenue is increasing. Principal repayment of
loan and interest payments, after payment to provinces, takes away 85 %
of the budget, he maintained.
Mr Shirani said there is a need to
widen the tax base. He said stock market is 28% of the GDP, but its
contribution to total tax is only 0.03 %.
Asad Umar, PTI MNA, said
the country desperately needs to change spending priorities. He said
according to Article 3 and 38 of the Constitution, dependence on
indirect taxes is unconstitutional. He said tax reforms should be
started from parliamentarians instead of people of Pakistan,
Nishtar, former federal minister, said reforms should be evidence based
and without policy consistency, best reforms become worst reforms. She
emphasized to have two or three decade vision. “Pakistan spends less
than 10 dollar per capita if we look at health allocation,” she said and
added that procurement budget is very important in health allocation.
She further said that there is no accountability in public services.