THE advisory committee comprising mainstream political parties has recommended realigning the National Finance Commission (NFC) with provincial capabilities to boost revenue mobilization. During a roundtable session “Prosperity for Pakistan: Policy Agenda for Incoming Government,” jointly organized by UNDP and SDPI, parties advocated for initiating a new IMF programme, improving governance and fostering a minimum broader consensus on the economic agenda for the upcoming general elections.
The discussions held and the input given by different speakers including prominent economists and representatives of various political parties would go a long way in crystallizing economic and financial issues and the way forward. There is logic in demand to forge consensus on the economic agenda before the forthcoming elections as this would facilitate the job of the new Government, which would face a tough situation because of the prevailing economic hardships and challenges. The elected governments generally find it somewhat difficult to pursue a realistic agenda in the backdrop of political polarization where opponents remain on the look out to find fault with almost every move or initiative of the government just for the sake of point scoring. Revenue mobilization is the need of the hour as external flows are understandably drying up and have a heavy price-tag and governance expenditure is increasing with the passage of time. Not to speak of the development and administrative expenditure, the revenue collection is not enough to meet even our debt obligations and defence needs. It is in this backdrop that both the federal and provincial governments are increasingly finding it difficult to pay salaries to their employees or pensions to senior citizens, who have no other source of income. It is the primary responsibility of the State to ensure provision of affordable medical and educational opportunities to the citizens but instead there are moves towards privatization of the educational and medical institutions. The Government also has a responsibility to chalk out workable and judicious plans for mobilization of more resources and it is the duty of every citizen to extend cooperation for the purpose. However, there is dire need to avoid burdening the existing taxpayers as both companies and individuals face heavy taxation and there are reports of many companies exploring options to move out of the country and operate from Gulf countries. There are, of course, sectors like real estate, businesses and agriculture which have the potential to help increase tax collection meaningfully. Former Finance Minister Dr Hafiz A Pasha has proposed imposing an additional Rs2,000 billion in taxes for the incoming government. This includes collecting Rs540 billion from the property sector, implementing an Agriculture Income Tax of up to Rs270 billion, imposing a 10 percent inheritance tax and introducing income tax on retailers and green tax among other measures. While taxing other sectors might have a justification, the proposal to impose a 10% inheritance tax must be thoroughly examined determining its scope and criteria as an across the board tax would not be a fair idea. It has rightly been pointed out that the authorities erred in not implementing reforms proposed by several Commissions and Committees including the one by Dr Ishrat Hussain. Similarly, the EXIM Bank has the potential to take care of many woes of exporters and importers but it is also a victim of delayed implementation. Senator Taj Haider of PPP made cogent proposals for enhancing production and reducing the cost of production but regrettably this remains an elusive dream despite repeated claims of the successive governments about bringing the cost of doing business down. Instead, repeated upward revision in electricity and gas tariffs, coupled with an increase in the cost of raw material triggered by depreciation of rupee, is rendering our products and exports uncompetitive. Privatization for the sake of privatization is another serious issue that is depriving the country of its valuable assets. If the private sector can run institutions and entities efficiently and profitably then there is no reason why this objective could not be achieved while retaining assets in the public sector. At best, public-private partnership could offer a viable solution. As for the proposition of another IMF programme by the next government, former Minister of State Dr Aisha Ghaus Pasha might have genuine reasons for such a scenario but IMF programmes have become a nightmare for the people.
