ISLAMABAD: The Association of Chartered Certified Accountants ACCA has recommended the government some changes in its approach towards the budget and economic model of Pakistan.

“Rationalise the size of the government and build political consensus on the charter of economy,” ACCA budget proposal for 2019-20 said.

“We are compelled to think beyond 12 months and take medium- to long-term perspective focusing on inclusive economic growth and development model for Pakistan rather than just managing cash flows and foreign exchange reserves,” the association noted.

The ACCA suggests that ‘Budget 2019-20’ should be based on ‘low tax rate’ and ‘broadening the tax base’ philosophy.

The policy focus should be more on increasing the size of documented economy from $315 billion in 2018 to over $1 trillion, alongside increasing the tax-to-GDP ratio based on the current formal economy.

The association said that to harness the fourth industrial revolution using new technologies to drive future economic growth, there is a need for supporting micro and small industries in underdeveloped regions.

The government should incentivise domestic investors for import substitution, encourage export of services and human resources, focus on public-private partnership to introduce outcome-driven citizen service models for education and health sectors, devise a national human resource development strategy through domestic and global demands. It should also ensure transparent and timely reporting of public spending, along with capacity building of government functions, proposes the ACCA document.

It has been suggested that information available with financial sector and revenue collection authorities should be allowed to broaden the tax base. “Reduce the corporate tax rate to 20pc and highest individual slab to 25pc, single and simple tax collection system for federal and provincial sales taxes, while the sales tax rate should be reduced to a single digit in the next 3 years starting with 14pc in 2019 -20.”

The ACCA proposals recommend that reliance should be on direct taxes including levy on agriculture sector, inter-corporate dividends should be exempt, evidence of source be made mandatory for foreign remittances, discretionary power to attach a bank account for recovery be abolished or revisited and services not be subject to minimum tax.

Published in Dawn, May 10th, 2019