State of Pakistan’s Economy and Federal Budget 2014-15
A seminar on ‘State of Pakistan’s Economy and Federal Budget 2014-15’ was held at the Institute of Policy Studies, Islamabad, on May 14, 2014.
The event was chaired by former federal secretary Masud Daher. The keynote speach was made by an eminent economist, Sakib Sherani, while the other speakers included Raja Amir Iqbal, ex vice president, Rawalpindi Chamber of Commerce (RCCI), Dr. Murtaza Mughal, president, Pakistan Economy Watch, Ameena Sohail and Atiq-uz-Zaman, sr. IPS associates and DG-IPS Khalid Rahman.
The speakers presented an in-depth analysis of the declining economic situation of Pakistan, the reasons behind this ironic state and recommendations for the future to build upon.
The experts agreed that it is the strong and robust institutional framework, not merely annual accounting exercises in the name of budgets and projects, that can lay concrete foundations for the economic growth and development of a country.
In his presentation, Sakib Sherani stressed that the country need urgent economic structural reforms, especially in the area of tax collection.
The former economic adviser of ministry of finance, who based his presentation on macro-economic and fiscal contexts, lamented that Pakistan’s economy was operating far below its potential majorly because of inefficient tax mechanisms, due to which, the tax revenues of the country have become stagnant and FBR was able to capture a very little tax percentage of the total GDP growth.
He also criticized the prevailing tax culture in Pakistan, where in 2012, around 3.2 million qualifying citizens according to NADRA databases were not even existent in the tax registers, while around 61 per cent of the parliament reported no taxable income in their tax returns.
He viewed that one budget cannot resolve all the problems, suggesting that the upcoming budget should be a part of a grand design, wherein the emphasis should be laid on higher tax coverage with lower tax rates. He also suggested that the subsidies offered by the government should support investment rather than consumption.
Ameena Sohail, a senior IPS associate, saw weak institutional framework as the reason behind such low tax returns. She said that the subsidy mechanism in Pakistan was also not very efficient as the rich also unjustifiably enjoy equal percentage of subsidies as the people with low incomes.
Another senior associate of IPS, Atiq uz Zafar, presented his perspective on Islamic economics, terming it a sustainable alternate model that has proved its potential. He advocated for the prohibition of Riba and suggested that if mechanisms of Zakat and Ushr were properly devised and implemented in Pakistan, it can prove to be framework that the country’s economy needs.
Raja Amir Iqbal, ex. sr. vice president, Rawalpindi Chamber of Commerce (RCCI) questioned the approach and practices of tax collection machinery of the government, which keeps burdening the existing tax payers with more taxes instead of bringing non-taxpayers into the tax-paying circles. He suggested the government to take concrete steps in the areas of energy and terrorism, without the solution of which the country cannot progress economically. He also hoped the Government to address the issues of fiscal disciplines, non-tariff barriers with India and the water issue, in the upcoming budget.
M Riyazul Haque, former additional secretary and ex member of National Tariff Commission and Khalid Rahman, director general, Institute of Policy Studies, Islamabad, also shared their views on the subject.
