Time right to expand tax net as workers return

Former SBP governor says remittances may become stagnant.

LAHORE: The crisis in Yemen should not have an adverse impact on workers’ remittances just yet, but the conflict should serve as an eye-opener for Pakistan to focus on broadening its own tax net, according to former State Bank of Pakistan governor Dr Ishrat Husain.

The Yemen crisis has seen the return of several Pakistanis working in the conflict-ridden country.

Husain, while briefing the Lahore Economic Journalists Association on Thursday, said remittances – one of Pakistan’s largest source of foreign exchange inflow – would not be hit just yet. However, this should serve as a reminder for Pakistan to start depending on its own resources instead dependence on remittances from the Gulf, added the former SBP governor.



He said while there was no threat of a downward slide in remittances, further migrants might not be welcomed anymore.

“We may have a stagnant growth in remittances in the future,” he said. “Pakistan has to work very hard on the diplomatic front to settle this issue.

“This is an ideal time to convince people to work here and develop a more refined tax culture, which could easily increase collection figures to Rs4 trillion from the current Rs2.7 trillion,” he said.  “It is the correct time to mobilise our own resources rather than depend on other countries to meet our expenses. There are currently 1 million taxpayers in Pakistan, whereas according to records, there are around 3.2 million people who could easily be brought under tax net.”

He added that reforms in the Federal Board of Revenue (FBR) and reduction in percentage of different taxes will help the government. “FBR laws are so complex that even many lawyers and commissioners are unaware of the clauses and their meanings”, said Husain. “The reforms will only hurt a few people but will benefit the overall economy.” Talking about LNG imports, Husain said that the government’s role should be of a facilitator and rest should be left to the private sector.

He stressed the government to give private sector a leading role in different development and infrastructural projects.

Published in The Express Tribune, April 17^th, 2015.