Atif Ikram Sheikh, President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), has underscored the importance of increasing the tax-to-GDP ratio. However, he emphasizes that this should be achieved by broadening the tax base and simplifying the taxation system rather than burdening existing taxpayers further. Sheikh proposes a pragmatic approach to achieve a tax-to-GDP ratio of 15 percent within the next five years by adding 1.5 to 2 million new taxpayers to the system.
He warns against implementing tax and Federal Board of Revenue (FBR) reforms without consulting the business community, citing past failures in such endeavors. The FPCCI chief outlines a three-pronged strategy for broadening the tax base: first, end-to-end digitalization of the taxation system for transparency and fairness; second, FBR reforms in consultation with the business community; and third, putting an end to maladministration and harassment by taxation authorities.
Acknowledging the challenges faced by the business, industry, and trade sectors due to factors like COVID-19, floods, and rising costs, Sheikh stresses the need for a new, expanded IMF program. However, he asserts that the recent years have been exceptionally difficult for these sectors, and any additional taxes must be considered with caution. Sheikh highlights a positive trend in inflation rates, with core inflation decreasing to 12.8 percent and headline inflation at 20.7 percent in March 2024, the lowest in 22 months. He calls for an immediate reduction in the key policy rate and suggests offering regionally-competitive export finance schemes and long-term financing facilities to exporters to boost economic growth.
