BUOYED by the success of the Government’s economic policies and growing trust of the multilateral institutions, Finance Minister Muhammad Aurangzeb has announced that Prime Minister Shehbaz Sharif will soon unveil an economic roadmap to take the process of economic stabilization forward. He did not share details of the proposed plan but assured there will be no burden of taxation on the salaried class and manufacturing sector and instead untaxed sectors like agriculture, real estate and retailers will be targeted for paying their due share of taxes.
The Finance Minister has a point in expressing satisfaction over the economic performance of the country and relaying a firm message to those who continue to resist efforts towards documentation of the economy and inclusion in the tax net. The sudden and unscheduled visit of the IMF mission to Pakistan sparked rumours that the Fund was upset over missing of some targets for the first quarter of the current financial year but the Minister categorically stated that the economic indicators were continuously improving and international financial institutions were impressed with the government measures and their confidence in Pakistan was increasing. This is understandable as foreign exchange reserves are increasing, revenue generation is picking up, inflation has come down, policy rate brought down, stock market is showing bullish trends and there are bright prospects for foreign investment in various sectors of the economy. It was because of all this that, as revealed by the Minister, the IMF was surprised how Pakistan’s economy recovered in fourteen months. The IMF has welcomed the reduction in deficit and turning it into a surplus during this short period. The sudden review of the IMF and negative reporting by a section of the media prompted fears among people about the possibility of imposition of more taxes, squeezing their income and building up inflationary pressure. However, the Finance Minister has put such fears to rest by assuring that the shortfall in taxes would be met only with the enforcement to get people to pay their taxes, implying there would not be any new revenue measures. The intention to bring agriculture, real estate and retailers in the tax net also augurs well as there was no justification for them not to pay their due taxes while earning handsomely.
In a positive development, the Punjab province has already passed an agricultural income tax law and the tax will be levied from next year. The way the PPP and PTI opposed the move during discussion and passage of the bill generated an impression that Sindh and KP might not follow the suit but the Minister said all the four chief ministers were on board. As for retailers, we have been emphasizing in these columns time and again that they should become a part of the tax-paying community but they seem to be in no mood to take advantage of the opportunities and incentives offered by the Government for this purpose. It is now time, the authorities should move with full determination to implement the plan to bring them in the tax net. However, there seems to be little justification for imposition of more taxes on the real estate sector as it is already facing a slump due to a multitude of taxes both by the federal and provincial governments as well as frequent upward revision in the valuation rates. The Minister has rightly emphasized signing of a Charter of Environment alongside a Charter of Economy in view of the dangers posed to the country by climate change as highlighted by long dry spells, flash floods and rains and the dense smog. An all-encompassing strategy will have to be formulated and implemented because of the severity of the challenge.
