The Pakistan Economy Watch (PEW) on Sunday said that continued political instability has compromised government’s ability to generate revenues which will result in increased debt burden and inflation.
Generally governments rely on taxes, exports, debt and printing currency to meet their expanses but Pakistan has lost two options as there was no desire to broaden tax base or trigger exports, said Dr Murtaza Mughal, President PEW.
He said economy had never responded positively to uncertainty hence insufficient tax income would force government to borrow more from different sources increasing debt burden which had already crossed over 60 per cent of the GDP.
Alternatively, the government could opt to print currency eroding exchange rate and triggering inflation, he added.
Dr Murtaza Mughal said that despite austerity claims, the government’s expenditure continue to rise but tax collection, the primary source of income, continue to dip resulting in persistent budget limitations.
The highly flawed tax system in Pakistan had helped rich to get richer on the cost of poor paving way to mass unrest, social problems and misbalanced budgets.
Dr Murtaza Mughal said that distorted distribution of wealth had reached new heights due to policy of unjustified exemptions heavy reliance on indirect taxes which were bleeding the poor white.
The government continue to provide incentives and exemptions to business community, especially manufacturers which augment their profits while ignoring the middle class and poor on whom burden in increasing by the passage of every day, he noted.
The government can borrow more print currency or opt for a fair, rationalised, unprejudiced tax system to make Pakistan an economically viable country.
