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Friday, July 30th, 2021

Budget deficit main challenge Pakistan’s economic situation needs expanded tax base

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Islamabad: Economic situation would continue deteriorating without resource generation if tax base is not expanded in the coming budget, said experts.

This was said by economic experts at a seminar ‘Forthcoming Budget 2011-12: Opportunities and Challenges’ jointly organized by Sustainable Development Policy Institute (SDPI) and Actionaid Pakistan here on Monday at SDPI office.

On this occasion, former Principle Economic Advisor at Ministry of Finance Sakib Sherani said that the expanding tax base is essential for reducing the budget deficit and meeting the country expenses but more are to be needed as well, adding that Pakistan is losing Rs. 1.3 trillion a year due to leakages in public sector expenditures, tariff losses and others.

He said that power crises costs Pakistan up to 3 percent of GDP, bad-governance in the sector 1.5 percent and Pakistan incurs 2 percent losses of its GDP due to mismanagement by FBR and Custom.

He suggested that four factors should be kept in mind while planning a budget that are stabilization with growth, balance sharing of burden, social protection and protection of future like dealing with water crises. Former Chief Economist of Planning Commission of Pakistan Dr. Pervez Tahir said, “We should increase efficiency and productivity of the current taxes besides expanding its base.”

Head of Economics Department in NUST Dr. Athar Maqsood Ahmed said that currently Pakistan is facing both stagnation in growth and inflation. So a combination of policies could be the best remedy as the situation is complex. He said that the government should go with those things which are doable and should avoid the policies that it cannot implant at the moment.

Hafiz M. Idrees, member of Income Tax Bar Association in Rawalpindi, said that there are flaws in the laws relating to taxes and these should be amended. He said that only 2 million out of 180 million people in Pakistan pay taxes. He said that only 35 companies pay 70 percent of their taxes. And efficiency of FBR is very below the expectations.

He said that different types of ratting should be abandoned so that tax base could become easy to expand. Executive Director of CPDI Mukhtar Ahmad Ali said that there are always several flaws in budget for example only 2 percent budget is allocated for education and out of that 95 percent is salary expenditure in the sector.

The speakers agreed over that floods terrorism, payment of debts, keeping petroleum prices lower, energy crises, corruption, non-payment of taxes by elites and several other factors contributed to ever growing budget deficit in the country.

It is pertinent to mention that Pakistan’s budget would be presented in the parliament in the first week next month. IMF is insisting that the government of Pakistan should take steps to reduce the budget deficit which is a big challenge for economic manager in Pakistan.

The seminar was attended by social workers, academicians, retired and serving officials, economists, journalists and others.

For more information, contact:
Faisal Nadeem Gorchani
Coordinator, Policy Advocacy and Outreach
Sustainable Development Policy Institute (SDPI)
38 Embassy Road, G-6/3 Islamabad, Pakistan
Postal Code: 44000
Tel: +92-51-2278134, (Ext: 113)
Fax: +92-51-2278135
Cell: 00-92-333-559 2210
Email: [email protected]


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