Karachi - The federal government is unlikely to meet the target of 5.1 per cent for GDP growth in the current financial year as it could settle at 4.2 per cent but it may achieve revenue target which was revised repeatedly by the government.
This was stated by Dr Ishrat Hussain, Dean and Director Institute of Business Administration (IBA) and former governor of State Bank of Pakistan in a workshop on “Budget Discussion Forum”, organised by Karachi Press Club in collaboration with Coca-Cola Beverages Pakistan Ltd here on Saturday.
He said the tax collection target could be achieved if policies are designed and enforced effectively throughout the country which is not an arduous task but the will of policymakers and proper mechanism is needed. The tax collection authority could not only collect a target of Rs 2,500 billion but it could surpass the benchmark of Rs 4,000 billion which will not only reduce fiscal deficit and debt-servicing but it will also enhance the expenditures on public sector projects. If local bodies are restored to function efficiently, people will happily pay taxes to the government because the system delivers well to the public interest which was evident at times when district governments were performing visibly in Karachi before 2007, Dean and Director IBA said. He said that in the budget, the government should allocate more funds for federal, provincial and local governments in order to provide trickle down effects to the common man.
“The budget should be based on spending on social sector and development of public sector projects pertaining to infrastructure, which will attract private sector to invest in the country to generate employments, revenues and improved living standard.” He said the taxes on the agriculture sector are decreasing considerably if compared with its relation to GDP but if a salary class could pay taxes on the threshold of Rs 0.4 million annual income, why not the agriculture sector is taxed equally. The property taxes in the Karachi could generate a handsome income for the development of whole city but unfortunately the taxes are not collected properly and deducted at the old rate set in 2001, Dr Hussain said.
He urged the media persons to play their role effectively to raise the issues of the public grievances and the impact over public in regard to budget and economic policies of the government.
“Media is the sole voice of the public but it should be empowered through capacity building and knowledge enhancement workshops.” Dr Hussain laid his emphasis on the positive development news of the business while avoiding sensational based stories reflecting biased analysis and imbalanced facts.
Shabber Zaidi, ex-president Institute of Chartered Accountant of Pakistan (ICAP), 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, he said, adding that this trend should be reversed.
The government should take more steps immediately to safeguard economy by putting it on the right path and should increase the tax-to-GDP ratio steeply which is presently standing at over 9 per cent in contrast to Turkey’s 20 per cent and India’s 17 per cent. Zaidi added the government should establish a system that records expenses.