Finance Minister Abdul Hafeez Shaikh on Saturday said self-reliance, curtailing dependency on foreign aid, decreasing government borrowings from the State Bank of Pakistan, development of the social sector and broadening of the tax base would be the hallmark of the upcoming budget 2011-12. Speaking as the chief guest at a pre-budget seminar, he said Pakistan had great potential of growth and showed remarkable growth rates over certain periods of time in its history. He said Pakistan needed to discover the reason why the growth rate had not been sustainable and no significant foreign investment took place in the country after 2005-6.
The minister said the underlying structures of the economy and politics kept the foreign investment away, adding that the manufacturing sector was also partly responsible for the slow growth rate, as it failed to improve the quality of its products and take imitative to capture world markets in the same manner as China. He said all were responsible for the economic crisis and everyone should take responsibility for the failure.
Shaikh said a major failure of Pakistan’s economy over the years was that political influence insidiously penetrated and gradually harmed the economy considerably. He said privatisation was the only choice left to save various state enterprises from disaster. The finance minister said owing to political influence, various government organisations related to the economic sector were being run by bureaucrats instead of professional.
He said the government was committed to reforms and had taken various initiatives like freezing its expenses, bringing zero tax rating for several industries and reducing subsidies, which should be sustained for long-term recovery and development of the country. He added that new positive political trends like free media, devolution of 18 ministries to the provinces, the NFC Award and proactive judiciary, coupled with new economic reforms for a considerable time, would help develop the country a lot.
Former minister for Industries and Production Jahangir Tareen said agricultural tax was imposed ten years ago by the provinces, but they had failed to collect it so far. He said every person holding 50 acres of land or above was required to pay agriculture tax on per acre basis and the provincial governments should be held accountable for not collecting the agricultural tax. He said Pakistan had been blessed with on of the most fertile land in the world, but successive governments had failed to invest in the research sector to increase crop yields. Tareen said Pakistan had the potential to produce 20 million cotton bales a year, but was producing no more than 1.2 billion bales. He added that 8 million people were rearing animals and producing milk across the country, but they were not adding anything in surplus terms to the national economy, without which growth was impossible.
The former minister said there would be grave consequences if the economy of the country was not reformed. Tareen said Pakistan needed fundamental changes in the legal system and new laws needed to be framed to make the reforms effective. The Federal Board of Revenue (FBR) chairman said the trust of the people in FBR and other government departments was depleting fast and reforms were necessary to restore that confidence within a timeframe.
He said there was a gap between potential and actual tax collection by the FBR, adding that 71,000 people had been served notice and Rs 93 million had been collected from those who had not paid a penny into the state exchequer despite having large amounts in their banks. He said the FBR had started identifying people who had huge incomes but were not paying taxes through bank accounts.
