Business

Finance minister acknowledges need to tax elite

Finance Minister Dr Abdul Hafeez Shaikh stresses increase in productivity in agriculture, industry.

November 04, 2010

ISLAMABAD: Referring to US Secretary of State Hillary Clinton’s statement on the need to tax Pakistan’s elite, Finance Minister Dr Abdul Hafeez Shaikh has said that it is in the country’s interest to enhance revenues, even if the advice has come from an external source.

“This is one of my pet peeves: countries that will not tax their elite who expect us to come in and help them serve their people are just not going to get the kind of help from us that historically they may have,” Clinton told an audience at the US Global Leadership Coalition Conference towards the end of September.

In an interview, Shaikh regretted that the tax to gross domestic product (GDP) ratio stood at a mere ‘10 per cent’, admitting that boosting it was essential to ensure socio-economic development. “The government will have to improve the tax system and bring evaders under the net to enhance revenues,” he said.

Shaikh explained that the bill concerning tax reform was with parliament and that the reformed general sales tax (RGST) regime would be implemented in consultation with all provinces.

A high-level meeting presided over by the finance minister on Wednesday gave international donors assurances that bills would soon be tabled in federal and provincial assemblies to seek approval of the RGST.

Development

Highlighting the commodity boom in the world market, the minister pointed out that Pakistan could reap benefits by enhancing its agricultural and industrial production.

Shaikh said that of the $7.5 billion the country would receive under the Kerry-Lugar bill, $2 billion would be allocated to the energy sector to help overcome the power shortfall.

This, according to him, will help industry grow and penetrate into the commodity market which has been providing ample opportunities to earn foreign exchange.

In addition, $2 billion will be spent to ensure food security and special focus will be given to building new dams and improvement of the irrigation system.

Flood havoc

“The recent floods have inflicted damages of $10 billion to the economy and brought the growth rate down in addition to affecting millions of people,” the minister disclosed.

However, Shaikh was hopeful that the economy would come on the path of stability by reforming not just the tax system but also public sector corporations.

“We have achieved growth of six to seven per cent in the past and will be able to achieve similar growth again, but it will take some time,” he added. “The economy is set to come on the path of stability within the next couple of years, provided the government is successful in bringing economic reforms.”

Published in The Express Tribune, November 5^th, 2010.

COMMENTS (2)

shoaib altaf | 14 years ago | Reply Dear writer i dont agree with you that Pakistan wants to apply taxes on rich people because Pakistan have asked IMF for zero rate tax policy for textile and agriculture. so whats the point of rgst then. simply money and time consuming exercise i wish every one pays tax in Pakistan but i dont think so that will be possible regards shoaib worried but caring citizen of Pakistan

Zahid Hussain | 14 years ago | Reply Who says that Pakistan has the ministries of planning and finance and there were or there are any planning and finance minister after 1970s? Is there any comprehensive natural and human resource development and utilization plan available on paper? Is there any detailed overall short-term, mid-term and long-term strategic financial vision in sight? What is there in the budget for the people of Pakistan? Can the finance minister tell Pakistanis what percentage of the total budgetary allocation is spent on education, health and maintenance of law and order? How much of their TAX MONEY is SPENT ON THEM? Pakistan always had, have and will continue to have highly educated but disgustingly illiterate ministers of planning and finance who are used to take dictations from corrupt politicians, plot and perks hungry government officials and, known enemies of the state, external donors. They lack creative and innovative intellectual depth to come up with genuinely workable solutions for artificially created economic and financial problems. There is no doubt that Pakistan is one of the world's richest countries in unexplored under-and un-utilized natural and human resources. THE WAY OUT IS NOT TAXATION TO ENRICH FBR BOSSES AND THEIR BOSSES! The way out is to totally abolish the taxes and bring the corporate sector on board for social and economic development and financial bail-out through convincing CONFIDENCE BUILDING measures. The money that is creating a parallel BLACK ECONOMY through corrupt practices can be turned into economic growth instrument by redefining, restricting and overhauling the MOTHER OF CORRUPTION - TAXATION APPROACH / FBR. Let the corporate bosses themselves decide that they want to put the country's economy back on track on their own or do they think it appropriate to hand over its command to IMF and Treasury Department of USA like few other Muslim countries have done? Do they think that if they have failed to survive in Pakistan will they be able to survive abroad after their country is turned into a SOVERIEGN ECONOMIC AND FINANCIAL JOKE? It does not take more than ONE PAGE summary to tell the rulers and all those who matter how to take Pakistan out of economic and financial mess it is in. BUT WHO IS CAPABLE OF WRITING THAT ONE PAGE SUMMARY?

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