LAHORE: Pakistan needs to shift from a protectionist to an economy-centric approach, for the sake of stability and recovery, says Prof Dr Hussain Mohi-ud-Din Qadri.

“Economic recovery is impossible without minimising no-go areas for local and foreign investment and without shedding the protectionist approach,” the deputy chairman of Minhaj University’s board of governors told a pre-budget seminar on Thursday.

He said that the international thinking and approach of open economic trade should be adopted so that local and foreign investors can confidently invest in the areas of their choice.

Economists Dr Amanullah, Senior Vice-President of Lahore Chamber of Commerce and Industry Zafar Mehmood, Dr Muhammad Tayyab and Dr Khurram Shehzad also expressed their views at the seminar.

“Many areas closed to local and foreign investors. The state needs to take bold decisions in view of the huge financial crisis facing the country. Otherwise, the crisis will deepen with each passing day,” Dr Qadri warned.

Despite initiatives like the Tax Reforms Commission and Asset Declaration Scheme, challenges like a complex tax system, red tape and resistance to change because of widespread corruption and infrastructure deficiencies are hindering substantial progress, he said.

Dr Qadri added that external factors like IMF programmes have also influenced policy directions, often necessitating austerity measures and structural adjustments.

The economist suggested taking stakeholders on board for effective changes in the tax structure, cutting the number of tax payments, a fair distribution of taxes across sectors and bringing retail, real estate and services sectors into the tax net.

He suggested a shift towards a direct taxation system, phasing out subsidies to nonproductive sectors, targeting support for the have-nots, repealing the minimum turnover tax and instead evaluating business profits directly, removing discretionary tax exemptions granted to ex-Fata/Pata regions, and curbing the discretionary power of tax men.

Dr Qadri also proposed elevating the GST exemption limit from Rs10 million to Rs30 million to incentivise smaller enterprises to formalise their operations.

Published in Dawn, June 7th, 2024