Dr. Mirza Ikhtiar Baig (Medal of Imtiaz/Order of Merit):
The World Bank has asked the political parties and policy makers of Pakistan to create a consensus on reforms in only 5 major sectors to fix the country’s sick economy instead of the contract economy, then it will be a great achievement in the country’s interest, including duty and sales tax. These include the elimination of exemptions, implementation of a simple income tax system, taxes on real estate and agricultural income. According to the World Bank, unemployment in Pakistan has risen to a record 12.2 percent, the public sector is inefficient and inefficient, and the tax system is inequitable.
It depends on indirect taxes and sales tax. World Bank Country Manager Naji Bihamsin has issued reforms titled “Decision Time” for Pakistan’s bright future and suggested a 3 percent increase in the current tax rate to GDP of 9.6 percent. In addition to the recommendations of the World Bank, if the political parties agree on the reforms of the following sectors and their cancer surgery, it will be an important achievement for the country’s economy, in which the restructuring of the loss-making institutions and the privatization of the national treasury are the first. 500 billion rupees annually to reduce financial losses. Among these institutions, steel mills, PIA, railways and power supply discos should be included in the first phase.
According to former Parliamentary Secretary and industrialist Rana Zahid Taseef, if these institutions are privatized immediately, then by eliminating their losses, the burden on the national exchequer can be reduced. Secondly, reforms in the energy sector and renewal of expiring IPPs on new terms so that they do not have to pay penalty in terms of capacity surcharge. Last year, the government paid more than 2000 billion rupees from the defense budget to IPPs in the form of capacity surcharge without purchasing electricity, whereas today, instead of capacity surcharge, electricity is purchased through competitive bidding.
Currently, the revolving debt of the power sector alone has increased to 2500 billion rupees, which includes theft of electricity, non-receipt of bills, generation of expensive electricity with imported fuel from defunct power plants, inefficient supply and delivery system, corruption and others. Institutions include factors such as government subsidies. The share of industry in the country’s economy ie GDP is 20 percent, agriculture is 19 percent and the service sector is 61 percent. Pays 70% of taxes and the service sector which contributes 61% to the country’s economy pays only 28% of taxes, which proves that the agricultural and service sectors are not paying their share of taxes in the country’s economy, while the manufacturing sector is. Paying 3 times more tax than its share which is an additional burden of taxes on the industry and affecting the competitiveness of this sector, therefore reforms in the tax system are very necessary so that every sector can pay its equal share of tax.
In the world, these direct taxes, which are unfair, are being abolished and direct taxes are being implemented in their place, while in Pakistan, these direct taxes have reached more than 60%, which is a flaw in the current tax system. At present, the Special Investment Facilitation Council (SIFC), under civilian and military leadership, is an effective and robust institution with legal and constitutional protection to remove obstacles to foreign investment projects. SIFC, on which the people, including me, have high hopes, has to play its important role in this regard. SIFC has announced 4 priority sectors of agriculture, minerals, IT and defense production for foreign investment in the country and work has been started to acquire investment in them. Army Chief General Asim Munir has offered food security to the Gulf countries for investment of 25 billion dollars each from Saudi Arabia and the UAE in the agriculture sector, in which the Gulf countries will grow and export agricultural commodities and animal fodder in Pakistan.
will do Before the Russia-Ukraine war, agricultural commodities were being supplied from Ukraine. SIFC is also working on Rekodik and other Mineral Mining projects in Balochistan. Apart from this, an MOU has been signed for a joint venture of an oil refinery with the world’s second largest Saudi oil company, Aramco, and Pakistani companies in Gwadar, and an announcement is expected on the imminent arrival of Saudi Crown Prince Mohammed bin Salman in Pakistan. In defense production, there are reports that Pakistan has sold $900 million worth of defense equipment to Ukraine in 2023.
Apart from this, the crackdown on the smuggling of sugar, flour, dollars from Afghanistan and diesel from Iran has reduced the value of these commodities and dollars in the country, for which I would like to congratulate the Pakistan Rangers and other law enforcement agencies. Yes, but this process should continue under a clear policy and strict administrative measures. Elections have been announced at the end of January next year, after which, God willing, the newly elected government will assume responsibility for 5 years. I request all political parties to make these economic problems and their solutions a part of their manifesto so that all political parties agree on reforms in at least 5 sectors to revive the country’s economy.
