Study advocates shift in focus from taxes to growth
The purpose of the exercise is to build systems so that the FBR may run the numbers before the start of every fiscal year to make sure that people duly pay their taxes. Photo: file
Pakistan Institute of Development Economics (PIDE) in its recent research study has highlighted the importance of paying key attention to growth with special focus on investment, productivity and exports.
According to the “One Year Growth Strategy for Pakistan”, launched to mark the country’s 75th Independence Day, historically the country had been focusing on taxation and not growth.
“We have to shift the focus to growth; for that we need to shine a light on investment, productivity and exports,” the report stated, adding that there was a need to remove bottlenecks.
According to the report, Pakistan has the lowest investment rate as compared to the neighbouring countries and the policy is totally focused on tax rates and revenue collection, giving no priority to investment and growth.
Pakistan’s debt-to-GDP ratio is another concern, which has continuously been rising over the past one decade. There is a negative linear association between debt and economic growth regardless of the type of debt and the income level. Moreover, since 1965, Pakistan has approached the International Monetary Fund (IMF) 22 times while the recent engagement has made it the 23rd instance, the report added.
Due to mismanagement and weak governance in the power sector, huge transmission and distribution losses occurred (Rs.473 billion during 2021, out of which Rs. 402 recovered through tariff and Rs. 71 billion was added to circular debt).
It termed problems in the energy sector “chronic” that could not be resolved by eight governments. Owing to mismanagement and weak governance in the power sector, transmission and distribution losses reached Rs473 billion in 2021. Of these, Rs402 billion was recovered through tariff and Rs71 billion was added to circular debt.
The PIDE report suggested a decentralised billing system at the distribution companies’ level and the need to introduce pre-paid meters for consumers as it could minimise the losses.
The report highlighted the importance of empowering Nepra to facilitate ‘wheeling’ at a marginal cost to make it attractive for sellers and buyers.
Published in The Express Tribune, August 16th, 2022.
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