Tax-to-GDP ratio will be increased to 15%: Gilani

ISLAMABAD: Prime Minister Yousaf Raza Gilani has said that his government plans to see an increase of up to 15 per cent in tax-to-GDP ratio in five years, but did not say how this target would be achieved.

On Monday, Gilani passionately urged international donors not to doubt his government’s commitment to transparency and urged them to give the government more time to implement economic reforms.

“The government is firmly committed to economic reforms but it would take time,” Gilani said.

“Please consider this as work in progress. Kindly be patient with Pakistan,” Gilani said at the forum that was organised to present his country’s post-flood plans to donor countries and organisations. “Your support and commitment is required over a much longer period during which we
can channel your assistance towards institutional and structural reforms,” he continued.

Gilani’s government is facing an uphill task to tame political opposition, by some of its allies as well, to take a bill aimed at reforming ‘outdated’ taxation system through parliament. The reformed general sales tax (RGST) bill, a move to fulfill donors’ demand, was rejected by opposition groups and the government’s allies when it was presented to the parliament last week.

Meanwhile, PM Gilani also urged the US to route compensation funds for flood victims through locally-established institutions “for timely and prompt disbursement of aid”.  Talking to the visiting US delegation, led by Ambassador Richard Holbrooke, he spoke of government’s efforts to build a consensus on board on the RGST and economic reforms.

“We remain committed to press through economic reform by addressing concerns of all political forces.”

He lauded the signing of the Wind Power Agreement with US Overseas Private Investment Corporation that will help reduce the current power shortage in the country. He hoped US government will fast track disbursement of assistance committed under the Kerry-Lugar Legislation and the Coalition Support Fund.

Holbrooke said that the US administration was working to resume negotiations on bilateral investment trade and was ready to press through the Reconstruction Opportunity Zones (in Pakistan’s tribal areas) legislation to prepare these as deliverables in the upcoming visit of President Barack Obama to Pakistan. He also stated that the US administration was also trying to get the Enterprise Fund Legislation passed from the US Congress to pave the way for increased US investment in Pakistan.

Holbrooke lauded PM Gilani’s efforts to pursue economic reforms by bringing all parties in parliament together on this important legislation. He said that their implementation will convey a positive message to the country’s international partners. (ADDITIONAL INPUT FROM PPI)

Published in The Express Tribune, November 16^th, 2010.