Pakistan’s economy could not face the budget deficit of Rs 500 billion but it has to create venues to meet its expenses through generation of taxes and privatisation of the public sector entities, said former State Bank of Pakistan (SBP) governor Dr Ishrat Hussain.
Speaking to the journalists at a workshop “Budget Discussion Forum” organised by Karachi Press Club and supported by Coca-Cola Beverages Pakistan Ltd, Dr Hussain said the direct taxes could be easily generated through different profitable and high performing sectors including property, retail, agriculture and motor vehicle in a way that the low-earning class could be avoided from the burden.
The reforms should be taken place in the property business as the tax collection is being done at the rate of 2001 whereas the ratio of agriculture tax is reduced to below 1 percent in the economy, which should be increased gradually.
He said privatisation has a bad repute in Pakistan but it benefited the economy for real, adding that the privatisation of banks made them profitable entities from loss-making companies.
Dr Hussain said the media is the sole voice of the public which held the government accountable. Budget reporting should be based on facts and figures without any sensationalism, which requires deep understanding of different subjects related to finance, economy and taxation.
Renowned tax expert and former Institute of Chartered Accountant of Pakistan (ICAP) president Shabber Zaidi said the government apparently failed to create balance between direct taxes and indirect taxes which impact negatively on overall tax collection.
The indirect taxes of the government are on the rise as in the case of petroleum products with 25 percent of the taxes, he said, adding that collection of direct taxes should be increased.
The government has no time but to take measure steps immediately to safeguard economy on the right path and it should increase the tax-to-GDP ratio steeply which is presently standing at more than 9 per cent in contrast to Turkey’s 20 per cent and India’s 17 per cent.
