Leading economists urge the government to fast-track the process of digital financial inclusion in order to enhance tax revenue.
Since its inception, Pakistan has been struggling for sustainable, durable economic growth due to its very low tax-to-GDP ratio, less volume of exports and other factors.
The current position of tax revenue and exports is far below its real potential, as the tax to GDP ratio is around 10 percent.
Dr. Sajid Amin, senior research fellow and chief of Sustainable Development Policy Institute’s Policy Solution Lab, said Pakistan was far behind in digital financial inclusion, particularly in digital payments, because the share of cash payment in its economy was very large.
He said steps must be taken to boost digital financial inclusion to increase tax revenue and enhances the capacity and capability of track and trace systems to boost tax base.
Financial inclusion mostly refers to the provision of equal opportunities for individuals and businesses to access suitable, affordable and timely financial services. It leads to documentation of economic activities, brings informal economy into the tax net and shrinks the shadow economy.
“In the first stage, the government must fully digitalize payment of salaries and pensions because expenditure under these heads contributes around 25 percent of the country’s non-development expenditure. Online transfer of salaries and pensions will be a major initiative towards digitalization of payments. Also, in Pakistan, the major problem for a poor person is inaccesibility to the financial market.
Financial inclusion offers financial services to the common people and creates more opportunities of livelihood, investment, health and educational services.
