AS a delegation of the International Monetary Fund (IMF) has arrived in the federal capital for talks on a new but larger bailout package, the Government is showing determination to press ahead with tough and tricky reforms in different sectors of the national economy. This became evident when the authorities concerned succeeded in persuading telecom companies to block SIMs of non-filers in batches whereas the Cabinet Committee on Privatization (CCoP) approved 24 state-owned enterprises (SOEs) for privatization programme (2024-29) on Friday, covering sectors including airlines, insurance, banking and power companies. Meanwhile, the process for digitization of the Federal Board of Revenue (FBR) has been accelerated and its completion is expected to contribute significantly towards the cherished goal of expanding the tax net.
The lender has expressed reservations over delay in implementation of some measures including the plan to bring small traders into the tax net, as the scheme received poor response from the trading community. However, it has to be realized that the Government has not adopted a stringent policy mainly because of the political fallout in the given complex situation in the country, which has also been acknowledged by the Fund. The IMF has also alluded to the social unrest but it is mainly because of reckless implementation of some policy decisions like unreasonable hike in prices of electricity and gas that have a telling impact not only on family budget but also the entire economic activity. And what a tragedy that the Fund is insisting that the Government should go for another round of increase in base power tariff in the face of revenue slippages, forgetting that such an approach is part of the problem and not a solution. The world over, welfare of the senior citizens is a priority but here the IMF is pressurizing the government to tax pensions, which will have serious social consequences. There is a genuine realization among people of Pakistan that the tax net needs to be expanded and that is why despite its negative impact on the overall socio-economic environment, support exists for blocking SIMs of non-filers. The issue is so serious that in a letter to the Minister for IT and Telecom, the GSMA (Global System for Mobile Communications Association) has pointed out that it will not only affect citizens and businesses but also the vision of Digital Pakistan and especially the digitization of FBR. It rightly underlined that such a move would have a wide-ranging impact on society, including gender disparities in SIM registration, impact on educational activities, confidence in foreign investment and challenges to financial transactions and e-commerce.
There are indeed ways to expand the tax net as proposed by the Overseas Investors Chamber of Commerce and Industry, which has asked the Government to make National Tax Number (NTN) mandatory for opening/maintaining a bank account and issuing compulsory NTNs to non-filers for transactions like vehicle and high value property sales, foreign travel and club membership. Professionals and service-providers have long remained either out of tax net or they are paying a fraction of their actual income. A workable plan should be devised and implemented from the next financial year to make them pay their due taxes. As for privatization, the CCoP recommended prioritizing the privatization of loss-making entities while limiting the federal footprint to strategic and essential state-owned enterprises (SOEs) under the federal government’s purview. This is the right approach and close to the original concept of privatization but successive governments deviated from the policy because of vested interests and the tendency to sell family silver to meet growing expenditure. It is time ambiguity in the privatization programme is removed once for all with a clear cut policy as to what is to be retained and what is to be divested. The privatization programme is one of the major reasons of discontent and uncertainty among government employees and a clear policy would boost morale of the administrative machinery.
