LAHORE: Former State Bank of Pakistan (SBP) governor Dr Ishrat Hussain regretted that provinces are not exploiting their revenue generation potential after getting a significant share from the federal divisible pool. Their revenue share has declined from 1pc of the Gross Domestic Product to 0.3pc, he said.

Addressing members of the Lahore Economic Journalists Association on Friday, Dr Hussain said now provinces had a higher share in resources than the federal government with the ratio being 60:40.

“The federal government now remains starved of funds as from its 40pc share it has to reserve huge amounts for debt servicing, defence and subsidies, plus it has to cover losses to public sector companies. The federal government does not have resources for development work,” he added.

He further said provinces had become complacent as they now had surplus even after financing development programmes. These resources, he added, should be used by provinces for education, health and social welfare services. Opportunities for new taxes also existed in provinces.

Dr Hussain said informal economy was another problem. Against 17pc sales tax, corporate tax and sales tax paid by the documented sector, the informal sector paid nothing.

“We are increasing the burden of taxes on compliant sectors without making efforts to bring the informal sector into the tax net,” he deplored. He said the solution lied in documented evidence available with the Federal Board of Revenue that stated that there should be 3.2 million taxpayers in Pakistan instead of the current one million.

The former SBP governor said tax laws were so cumbersome, giving rise to discretion providing opportunity for corruption.

“In the current technological era, everything should be computerised,” he said, adding technology should facilitate the taxpayer to know its liabilities in cases pending for years. There was a need for administrative policy reforms in the tax regime.

“The way forward for the federal government is to launch development projects in partnership with the private sector that could provide 66pc of the equity,” he added.

LCCI: The Lahore Chamber of Commerce and Industry (LCCI) on Friday called for immediate withdrawal of sharp increase in quarantine rates. In a statement issued here, LCCI President Ijaz A. Mumtaz said despite the fact that Indian quarantine was free, authorities in Pakistan had made an exorbitant increase in the charges here.

He said livestock exports that started in 2013 after nine years would suffer a deadly blow because of the SRO issued on March 31.

“There is a need to exploit potential of our livestock sector and use it as engine for economic growth and food security for the country leading to rural population empowerment and socioeconomic development uplift,” he added.

Published in Dawn, April 18th, 2015

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