KARACHI:
Pakistan needs economic reformation, which will require the government to take concerted steps. The government must expand its reach to include more people and sectors in the tax net. Misgovernance and bureaucratic hurdles have prevented the documentation of the informal economy because of which the country loses a significant tax base. Thus, the government needs to enhance the tax base and include the informal sectors by instituting policies that incentivise businesses to become part of the documented economy.
Second, the state-owned enterprises incur losses of billions of rupees every year, ultimately falling on the government to finance the gaps. In most developed economies, the liberal economic model encourages the private sector to run the economy with the government exercising little control over market forces. Pakistan needs to emulate this to halt the burgeoning debts. The government should privatise the loss-incurring enterprises. The hefty amount saved from this can provide a cushion to support the fragile economy and put it on a sustainable path.
Third, the agriculture sector largely goes untaxed due to the weak coordination between the federal and provincial taxation agencies. The agriculture income tax collected from all provinces combined stood at a meagre Rs.2.75 billion in the fiscal year 2019-20, which is far below its real potential. Therefore, coordination between all the taxation bodies must be strengthened to avoid loopholes and increase revenues collected from the agricultural sector. It is about that all the stakeholders should put their interests aside and work honestly to revive the ailing economy.
Asad Aziz
Khushab
Published in The Express Tribune, July 17th, 2022.
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