Experts call for ‘deep-rooted’ tax reforms

Published September 14, 2019
Economic experts say higher tax collection can only be achieved with a growing economy and similarly devaluation of the rupee alone cannot help increase exports without broadening the industrial base. — AFP/File
Economic experts say higher tax collection can only be achieved with a growing economy and similarly devaluation of the rupee alone cannot help increase exports without broadening the industrial base. — AFP/File

KARACHI: Economic experts say higher tax collection can only be achieved with a growing economy and similarly devaluation of the rupee alone cannot help increase exports without broadening the industrial base.

Speaking at the inaugural session of three-day international workshop on best global practices of VAT/GST, organised by International Bureau of Fiscal Documentation (IBFD), Netherlands in collaboration with Sindh Revenue Board (SRB), they were critical about a large number of taxes being collected with high tax rate and suggested for early rationalisation of tax rates and reduction in number of taxes.

They further said that by devaluation of the rupee exports could not be enhanced therefore it was equally important to consolidate industrial activity for achieving growth in exports.

The industrial base of the country on the contrary has shrunk rather than recording growth, they observed.

Former finance minister Shaukat Tareen expressed deep concern over the current economic condition and suggested there was urgent need for introducing deep-rooted reforms with structural changes in tax collection if revival of the economy has to be witnessed.Tareen was critical that the National Finance Commission (NFC) award and said this made central government financially weak because under distribution formula more resources go to provinces.

He further said that an economy with huge frontload of taxes cannot grow and as such there was an urgent need to reduce expenses, rationalise taxes and increase resources if sustainable growth has to be achieved.

Unfortunately, he said, the manufacturing sector which contributes up to 18 per cent in GDP has to contribute up to 80pc in revenue collection. Therefore, provinces must impose agriculture tax to ensure equitable contribution in tax collection.

Institute of Business Administration Dean Farrukh Iqbal said that growth in tax collection could only be achieved in growing economy therefore he felt that economic growth was more important than growth in tax collection and the government was more focused on later.

He further said that presently around 50 taxes are being collected and there is a need to reduce the number as well as cut in rates for which tax system has to be re-designed.

SRB Chairman Khalid Mahmood said for the last three consecutive fiscal years the board had been recording revenue collection growth of around 28 per cent.

Published in Dawn, September 14th, 2019

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

KP’s ‘power struggle’
Updated 21 Jun, 2024

KP’s ‘power struggle’

Instead of emboldening protesters, CM Gandapur should encourage his provincial subjects to clear their due bills and ensure theft is minimised.
Journalist’s murder
21 Jun, 2024

Journalist’s murder

ANOTHER name has been added to the list of journalists murdered in Pakistan. On Tuesday, Khalil Jibran’s vehicle...
A leaner government?
21 Jun, 2024

A leaner government?

FINANCE Minister Muhammad Aurangzeb has reiterated his government’s ‘commitment’ to shutting down ministries...
Kindness needed
Updated 20 Jun, 2024

Kindness needed

This year’s World Refugee Day theme — solidarity with refugees — includes keeping our borders accessible and addressing the hurdles they face.
Fitch’s budget note
20 Jun, 2024

Fitch’s budget note

PAKISTAN’S ongoing economic crisis is multifaceted. At one end, the government must pursue stabilisation policies...
Cruelty to animals
20 Jun, 2024

Cruelty to animals

TWO recent incidents illustrate the immense cruelty many in this country subject voiceless animals to. In the first...