KARACHI, March 17: Central Board of Revenue Chairman Abdullah Yousuf on Friday called upon tax consultants and professional bodies of accountants to assist the government in generating more revenues by creating awareness and tax culture so that the tax base could be broadened to meet infrastructural development cost badly needed for having a sustainable economic growth.

Speaking at a two-day Asia Pacific Tax Conference 2006 on “Tax system -– A catalyst for economic development” organized by the Income Tax Bar Association, Karachi (ITBAK), the CBR chief said that although revenue targets were being met, the next budget was expected to be of larger deficit of four per cent as compared to the last year’s 3.2 per cent.

“To achieve a sustainable growth, the country needs to improve its tax-to-GDP ratio which stands lowest in the region.”

Mr Yousuf said: “There are three major players in the field -– businessmen, government and tax consultants -– and if we want to have a sustainable economic growth it is necessary that our efforts should supplement each other. It is the duty of government to provide matching infrastructure with a quantum economic growth being led by the private sector and also provide an environment conducive to investment. But all these could be achieved through mobilization of more resources.”

The CBR chairman said it was easy to double exports but one could not imagine how much matching development in infrastructure would be needed and all this required resources and funds. “In case we fail to provide infrastructure, it will break the current growth momentum achieved by the private sector.”

Therefore, he said it was imperative that professional bodies like tax bars and chartered accountants should create realization and tax culture in the country so that tax base could be broadened, and this would also help further rationalize tax rates.

Citing an example, Mr Yousuf says in Turkey there are 43,000 tax collectors, but an equal number is of tax consultants or professionals who are legally assigned responsibility by the state. “I would like to give you a similar assignment, but it should be discharged with responsibility.”

The CBR chairman said further that it was inevitable that for the future of the country “we have to formulate policies for achieving higher economic growth”. Last year, he said, there was 8.4 per cent growth, which was second to China, and now it was expected to range between 6.5 and seven per cent.

Mr Yousuf said the real challenge was how to ensure a high growth rate because without sustaining it the country could not generate employment, reduce poverty and meet other costs such as education and health.

“The country direly needs local and foreign investments to have a sustained growth in exports which we missed in the 1960s and 70s. There was a wrong turn in our history where we adopted an import substitution policy and discarded export-led growth. The world market is enormous in size and one should focus and target its areas, and there is no reason that exports could not grow at a faster pace and the government responsibility is to make available a matching infrastructure. Therefore, all these require funds and resources which could not be available without improving and expanding the tax base,” the CBR chairman observed.

He said the country last year saw inflation moving into double digit at 11 per cent, but due to some monetary measures it was brought down to eight per cent and was expected to move further lower to seven per cent by the end of the current fiscal year. As a result of high inflation there was a food crisis which was also controlled by taking measures on the supply side.

However, he said when there was a demand it was natural that prices of any commodity would shoot up and create a lot of problem as was witnessed in cement and steel. The CBR chairman said that cement capacity would increase from 18 million tons per annum to 42 million and similarly, steel production would rise to four million tons from the present three million tons.

Mr Yousuf said that at present there were 24 million cell-phone connections in the country. “One connection costs around $200 (including installation of capital goods, etc) which means that around $7 billion have been invested in this sector.

He said a reduction in multiple taxes was already in momentum and lowering of number of taxes would also be met.

Earlier, Saqib Masood, President of the Income Tax Bar Association, Karachi, appreciated the CBR for introducing various tax reforms.

The first technical session was chaired by Razi-ur-Rehman, Chairman of the Securities and Exchange Commission of Pakistan, and speakers were Syed Masood Ali Naqvi and Jamamluddin Ahmed.

The second session was chaired by Sunil Goyal, President of the South Asian Federation of Accountants, and speakers were Syed Muhammad Shabbar Zaidi, President, Institute of Chartered Accountant of Pakistan, and Younus Rizwani Sheikh, President, All Pakistan Tax Bar Association. The third technical session was chaired by Ebrahim Sidat and speakers were Ahmed Khan, Dr Ikram-ul Haq, Hassan A. Bilgrami and Syed Mansoor Ali Shah.