This refers to the news report, ‘Informal economy strains Pakistan’s tax system’, 19/12/22. Dr. Lalarukh Ejaz, Assistant Professor at the Institute of Business Administration (IBA) observed to Wealth PK that the informal sector in Pakistan has grown over the past few decades, and now alarm bells have started ringing because the informal sector growth threatens to negatively impact the tax collection.

The growth of “digitalization” is a blessing as it can lead to a dampening effect on the informal sector. Also, we may not be able to fully curb the informal economy/sector already taking place on our western borders/boundaries. This informal economy on the western fringes does benefit those people who reside at or near the western boundary. However, if concerted efforts are made by the government in cooperation with the private sector, then our three key provinces of Punjab, Sindh, and KPK may witness a gradual reduction in the informal sector accompanied by a gradual increase in the documented business sector.

It may be next to impossible to entirely remove the informal economy from our economic system; however, the contributory percentage of the informal sector in our GDP/GNP can be curtailed over time by the judicious use of our bureaucracy, modern technology, modern finance, surveillance, and remunerative measures for the undocumented to get themselves documented. Data and statistics should be collected for all informal sectors of our economy so that effective planning and implementation can be commenced to attract the un-documented to the documented one; last but not the least, the bureaucracy and the FBR must take a lenient view of all those who wish to jump ship or have already jumped ship from the informal to the documented arm.

Also, it may be in the interests of the country to control and reduce its informal economy in the long run so that we can avoid falling into the trap that is the FATF grey list.

ABBAS R. SIDDIQI,

Lahore.