The Pakistan Business Council (PBC) has expressed hope that leading political parties will prepare a minimum framework for developing a national economic agenda in the upcoming Friday meeting with representatives of the corporate sector.
PBC Chief Executive Kamran Y Mirza, while talking to The Express Tribune, said that Pakistan needs a national economic agenda which could be followed by successive governments in coming years.
PBC has invited all the top five political parties to participate in the meeting on Friday in Islamabad to discuss the possibility of agreeing to a minimum framework for developing a consensus on the national economic agenda, he said.
“We have already met and shared our views on economy with the leadership of major political parties and all these parties are onboard and are part of the process to move forward in economic planning,” said Mirza.
Speaking on the importance of broadening the tax net, he said, “income tax should be levied equally on all sectors irrespective of the source of income.” The tax-to-gross domestic product (GDP) ratio of Pakistan is just nine per cent while the average tax-to-GDP ratio of developing countries is 14 per cent, he said, adding “we need to increase our revenues and tax-to-GDP ratio.”
“We cannot afford anymore the tax exemptions that are being given to various sectors,” he said, adding that the problem of tax evasion and smuggling could be resolved through consistent policies.
The corporate sector has been pressing the government for months to set a minimum framework but the progress is slow and it is yet to produce results. Despite this, the corporate sector is hopeful that economic debates will result in concrete steps from the government.
Analysts believe that the government should tax agriculture income through which the country can generate at least Rs100 billion annually. They also believe that the country has to levy taxes on sectors that are out of the tax net to generate at least Rs400-600 billion more than the current revenue target of Rs1,588 billion.
Likewise, the American Business Council (ABC), an association of over 60 American companies in Pakistan, expressed hope that the ongoing debate on economic issues among top political parties and the corporate sector would produce results.
The corporate sector has been pressing the government to levy agriculture income tax from the next fiscal year, but the Federal Finance Minister Hafeez Shaikh on Tuesday said that farm tax is a provincial matter.
Published in The Express Tribune, April 28th, 2011.
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