Economic experts have proposed that Federal Board of Revenue (FBR) should be replaced by an autonomous revenue organisation on which the government has no influence or authority. Former Chief Economist of Pakistan Dr Pervez Tahir stated that despite the fact that the World Bank had spent millions of dollars in a bid to revamp the FBR, it had failed to achieve the desired results.
The tax to GDP ratio has remained static around nine percent for many years, which underlines that the taxpayer is unwilling to pay taxes and the tax machinery unable to widen the tax base. He suggested that the government should disband the FBR and set up an independent revenue organisation, which would directly work under the command of Council of Common Interests and has no government and political control. It would be responsible for all federal and provincial tax collections, he underscored.
Dr Tahir was addressing the audience of a pre-budget seminar, which was organised by the Lahore Economic Journalists Association (LEJA). He underlined that it was expected that the country would not have option of external debt or assistance owing to changing international scenario and the government had to focus only on the taxes and internal resources in the forthcoming federal budget.
He said that the need of the hour was to develop consensus across the political spectrum. He was of the view that if political leadership could resolve difficult issues like National Finance Commission (NFC) and the 18th Amendment, then why it was not willing to develop economic consensus.
He pointed out that after the passage of 18th Amendment the provinces have greater autonomy with provincial budgets becoming even more important than federal budget to review the overall economic situation as after the NFC award in the next financial year provincial share would be 57.5 percent.
Dr Tahir underlined that the government was expecting 2.4 percent economic growth this year, but in fact the country would have zero percent net growth as growth projections would be cancelled out by the population growth rate. He warned that in such circumstances when the country has zero growth rates there is no chance of development. Responding to a question, he said economic decision makers are civil servants, which might be good in administration, but are less able in dealing with the economy.
He indicated that there was need to develop a specialised economic group in Central Superior Services as the country had seen that imported economic managers who had advisory roles in decision making could not produce any positive results during the last six decades. Speaking about the energy crisis, Dr Tahir said that 18th Amendment had already given autonomy to provinces, now the government should give free hand to the provinces to develop indigenous energy resources. Highlighting the causes of low foreign direct investment, noted economist Dr Qais Aslam said that low transparency, poor governance, large transaction costs because of inefficiency of institutions and administrative bottlenecks were main hurdles.
In addition, terrorism, law and order, poor country profile, lack of skills and education, low implementation of standards and lack of infrastructure and energy were other impediments. Dr Aslam said that the country had tremendous untapped energy resources, including fairly sizable natural gas reserves, some proven oil reserves, coal (Pakistan has the fourth-largest coal reserves in the world) and a large hydropower potential. It also has solar and wind as well as uranium power generation potential, but the owing to mismanagement the country was face severe power shortage.
Speaking about the revenue side of the federal budget, he underlined that direct taxes should include incomes from all sectors of the economy and Income Tax should be levied after a lower slab of Rs 500,000 per annum.
Economist calls for abolishing FBR
