RGST bill an important first step

Taxing agriculture makes sense, says US ambassador.

KARACHI: The Reformed general sales tax bill is an important first step to raise revenues amid measures to boost security and development spending, said US Ambassador Cameron Munter during a visit to the Karachi Stock Exchange on Monday.

He said that it makes sense to include agriculture, a sector that constitutes one-fifth of Pakistan’s gross domestic product (GDP), as part of efforts to expand the narrow tax base, but added that this is also a political question that is not easy.

“Achievement of sustained economic growth and prosperity for citizens depends on government economic policies providing the base for the private sector to succeed,” he said.

Progress, however, cannot be achieved without first adopting necessary economic reforms.

With a fiscal deficit of 6.3 per cent of GDP in financial year 2009-10, the government has been unable to meet its commitments to the International Monetary Fund under the October 2008 stand-by agreement that provided more than $10.7 billion in loans over two years. He also pointed out that the tax-to-GDP ratio is less than nine per cent, one of the lowest in the world.

Members of the Karachi Stock Exchange board of directors were present on the occasion.

Published in The Express Tribune, December 7^th, 2010.