No shortage of public revenue options, say experts

KARACHI: The government has enough options to generate additional money through taxation but it also requires austerity measures to overcome post-flood challenges, experts said.

The government is looking for options to immediately generate additional income to rehabilitate millions of flood victims.

Muhammad Sohail, the CEO of Topline Securities, said that the government has a fair number of options to produce the required funds to rise above the present challenges posed by the floods.

The post-flood situation is difficult for the cash-strapped government as budget deficit is likely to surge this year, Sohail said, adding that the government is mulling over all possible options to generate money. It can do so from taxing large property holdings, imposing a regulatory duty, levying a 10 per cent surcharge on income tax, etcetera, he said.

The government is also bringing in the reformed general sales tax (GST) from October 1, which is a good step forward but is only fruitful in the long run and will not help in generating money immediately, he added.

Shabbar Zaidi, a former president of the Institute of Chartered Accountants of Pakistan (ICAP), said that the reformed GST will help in the future in widening the tax net but the government needs money immediately to run its post-flood operations.

He said that he is not optimistic that the government will bring the services sector into the tax net to improve immediate tax collection.

On the advice of the president, the federal and provincial governments are busy evaluating options to generate funds for the rehabilitation of flood victims.

Government officials have said that world donors expect the government to collect additional money from its own citizens. Donors question how the government can ask for funds from abroad when residents do not pay their own taxes.

Published in The Express Tribune, September 19^th, 2010.