SLUGGISH economic growth has been a source of concern both for the Government and the people of Pakistan but two positive developments are indicative of silver lining on the horizon. Remittances by Overseas Pakistanis grew by 24.4% (to $2.1 billion) in August as compared to same month last year and Prime Minister Imran Khan has formed a Ministerial Committee to review proposals that seek equitable taxation by increasing the burden on upper class.
The significant increase in home remittances by Overseas Pakistanis and rationalization of taxes could help overcome the financial woes of the Government and as a consequence it might be able to spend more on projects and programmes aimed at welfare of the common man. It is noteworthy that remittances have crossed the mark of $2 billion for the third consecutive month and in July these peaked to a record of $2.768 billion. It shows the steps taken by the Government to motivate Overseas Pakistanis to send money back home through official channels have started paying dividends. The increase is important as it took place despite cut in income of Overseas Pakistanis due to economic recession caused by Covid-19 in almost all countries of the world and even termination of services of many in some countries. Home remittances have become the largest source of foreign exchange earnings for the country bypassing exports and there is potential to tap this source further through more incentives to Overseas Pakistanis. As for rationalization of taxes, there have long been demands and proposals for reducing dependence on unjustified taxes on POL products and repeated upward revision of electricity and gas tariffs by making all those to contribute to national kitty who have capacity to pay more taxes. Former Finance Minister Dr. Hafiz Pasha has come out with workable proposals and hopefully these would be adopted with proper adjustments keeping in view the ground realities. Reduction in corporate tax was long due and especially in the backdrop of pronouncements of the Prime Minister to facilitate creation of wealth that could lead of acceleration in economic activity and creation of more job opportunities. Salaried class also needs relief in taxes as the Government has increased burden of taxes on them without enhancing their salaries and allowances in the ongoing fiscal year. The new proposals should not discourage investment in real estate and bank savings as was done in the past with serious implications for the economy.
