KARACHI: Contrary to what most other stakeholders say, the American Business Council (ABC) and the Overseas Investors Chambers of Commerce and Industry (OICCI) favour the imposition of the Reformed General Sales Tax (RGST) despite the continuing economic crisis.
In response to a Dawn questionnaire, OICCI President Ameena Saiyed quoted the quarterly Business Confidence Index according to which inflation remains the primary reason for slow economic progress. Over 80 per cent of the economy stands affected by this one factor. Government policies and the rising cost of conducting business follow as the next two challenges for business while law and order is the fourth.While the manufacturing and services sectors are hopeful about the coming six months, the retail sector does not share similar sentiments, she said, adding the OICCI supported the RGST as it will help document all segments of the economy and broaden the tax net. The increased rate will obviously put pressure on margins. She, however, urged the government to test the system before implementing it.
Apart from broadening the tax base, she cited investment-friendly environment and policy consistency as the other pre-requisites for growth.
In this regard, she detailed the role that, she said, the OICCI was playing by way assisting the government in policy formulation by conducting various surveys and reports.
When it comes to resource scarcity, the OICCI chief suggested a long to-do list. It included documentation of economy; plugging of leakages; ending all cartels; ensuring a level playing field; taxing farm income; identifying 'sunrise' industries; and devising an investment- friendly policy framework.
Answering the same set of questions, ABC President Humayun Bashir and Vice-President Saad Amanullah Khan echoed the sentiments expressed by the OICCI chief, with the addition that intellectual property rights, they think, need to be enforced effectively.
“If we do not address the symptoms then Pakistan's economic crisis is going to get worse,” they warned, urging that urgent actions were required to tap alternative energy resources as well as in terms of privatization/restructuring of bleeding state enterprises such as the Steel Mills and PIA.
The RGST, they insisted, would help document the economy and address the issue of resource scarcity. “Instead of introducing or using other tax sources, it is ideal to expand the GST to apply across all sectors. This will help improve our Tax-to-GDP ratio,” they said, adding that only the measures outlined above have the potential to work as catalyst for growth.
All economic sectors shall pay taxes and the government shall cut down its expenditure if it is serious about taking care of the resource crunch, they concluded.