Economic agenda: Pakistan Business Council gets political parties on board
Body recommends import of LNG on a fast-track basis to overcome energy shortage.
ISLAMABAD:
A business community advocacy group on Friday unveiled a plan to steer the economy out of crisis, which largely reiterated familiar measures but made a distinct mark by winning support of political parties prior to its implementation.
The Pakistan Business Council, a group of 35 conglomerates, said the full implementation of what it called the minimum national economic agenda would result in lower inflation and higher national income and lift millions of people out of poverty.
Parliamentarians from the Pakistan Peoples Party (PPP), Pakistan Muslim League-Nawaz (PML-N), Pakistan Muslim League-Quaid (PML-Q), Muttahida Qaumi Movement (MQM) and Awami National Party (ANP) came together to endorse the agenda.
“During the last three years, the average inflation rate has remained at 15 per cent and average gross domestic product (GDP) has stood at a mere three per cent, resulting in a significant surge in poverty levels,” said Pakistan Business Council Chairman Asad Umar. He informed that all mainstream political parties had reached a 90 per cent consensus on the minimum national economic agenda.
The agenda called for elimination of the presumptive tax regime and replacing it with a regime based on taxing net income. However, conglomerates have opposed the revival of wealth tax, which will hurt industrialists the most, and called for necessary legislation at the provincial level to tax agricultural income.
The council agenda emphasised the need for generating additional revenues of Rs400 billion within the present tax regime through better enforcement. It also recommended slapping a tax on urban immoveable property. The minimum agenda was, however, silent about the implementation of reformed general sales tax.
The agenda suggested reducing losses incurred by public sector enterprises, rationalising subsidies by giving only targeted ones and avoiding wastage in development projects. It stated that if these measures are implemented and a policy, which taxes all incomes above Rs300,000, is enforced, the tax-to-national income ratio will reach 15 per cent from the current 9.1 per cent. The jump in the ratio will help restrict the budget deficit to four per cent of total national income.
However, this is contrary to what the government has planned for the next three years. The government’s Budget Strategy Paper 2011-14 talks about a tax-to-GDP ratio of only 10.3 per cent, an indication that there will not be any major shift in policies in coming years.
The Pakistan Business Council agenda also recommended import of liquefied natural gas (LNG) on a fast-track basis to overcome energy shortage. Moreover, it recommended rationalising energy prices to curb excessive consumption and sought priority allocation for the production sector.
The plan also called for civil service reforms and implementation of a Pay and Pension Commission report for restructuring the education, health, police and judiciary sectors.
Appreciating the document, PML-Q Senator Haroon Akhtar said, “Most of us know what needs to be done but some of us do not know how.” Akhtar said the minimum economic reforms agenda did not discuss the agricultural sector, despite the need to enhance yields and subsequently farmer incomes.
PML-N representatives emphasised the importance of taxing all sectors of the economy, which is ironic, given its opposition to the reformed general sales tax.
The council chairman urged political parties to nominate their representatives for formation of a working group to finalise the agenda. The council intends to implement the plan from the upcoming budget, which seems an uphill task, given the Ministry of Finance’s approach towards resolving major economic issues.
Published in The Express Tribune, April 30th, 2011.
A business community advocacy group on Friday unveiled a plan to steer the economy out of crisis, which largely reiterated familiar measures but made a distinct mark by winning support of political parties prior to its implementation.
The Pakistan Business Council, a group of 35 conglomerates, said the full implementation of what it called the minimum national economic agenda would result in lower inflation and higher national income and lift millions of people out of poverty.
Parliamentarians from the Pakistan Peoples Party (PPP), Pakistan Muslim League-Nawaz (PML-N), Pakistan Muslim League-Quaid (PML-Q), Muttahida Qaumi Movement (MQM) and Awami National Party (ANP) came together to endorse the agenda.
“During the last three years, the average inflation rate has remained at 15 per cent and average gross domestic product (GDP) has stood at a mere three per cent, resulting in a significant surge in poverty levels,” said Pakistan Business Council Chairman Asad Umar. He informed that all mainstream political parties had reached a 90 per cent consensus on the minimum national economic agenda.
The agenda called for elimination of the presumptive tax regime and replacing it with a regime based on taxing net income. However, conglomerates have opposed the revival of wealth tax, which will hurt industrialists the most, and called for necessary legislation at the provincial level to tax agricultural income.
The council agenda emphasised the need for generating additional revenues of Rs400 billion within the present tax regime through better enforcement. It also recommended slapping a tax on urban immoveable property. The minimum agenda was, however, silent about the implementation of reformed general sales tax.
The agenda suggested reducing losses incurred by public sector enterprises, rationalising subsidies by giving only targeted ones and avoiding wastage in development projects. It stated that if these measures are implemented and a policy, which taxes all incomes above Rs300,000, is enforced, the tax-to-national income ratio will reach 15 per cent from the current 9.1 per cent. The jump in the ratio will help restrict the budget deficit to four per cent of total national income.
However, this is contrary to what the government has planned for the next three years. The government’s Budget Strategy Paper 2011-14 talks about a tax-to-GDP ratio of only 10.3 per cent, an indication that there will not be any major shift in policies in coming years.
The Pakistan Business Council agenda also recommended import of liquefied natural gas (LNG) on a fast-track basis to overcome energy shortage. Moreover, it recommended rationalising energy prices to curb excessive consumption and sought priority allocation for the production sector.
The plan also called for civil service reforms and implementation of a Pay and Pension Commission report for restructuring the education, health, police and judiciary sectors.
Appreciating the document, PML-Q Senator Haroon Akhtar said, “Most of us know what needs to be done but some of us do not know how.” Akhtar said the minimum economic reforms agenda did not discuss the agricultural sector, despite the need to enhance yields and subsequently farmer incomes.
PML-N representatives emphasised the importance of taxing all sectors of the economy, which is ironic, given its opposition to the reformed general sales tax.
The council chairman urged political parties to nominate their representatives for formation of a working group to finalise the agenda. The council intends to implement the plan from the upcoming budget, which seems an uphill task, given the Ministry of Finance’s approach towards resolving major economic issues.
Published in The Express Tribune, April 30th, 2011.