Pakistan
heading towards economic collapse: experts
KARACHI:
Pakistan is heading towards economic collapse and immediate measures
are needed to avert such a situation, said experts at a post-budget
2012/13 seminar organised by the Institute of Cost and Management
Accountants of Pakistan (ICMAP) on Tuesday night.
7
June, 2012
“Pakistan
registered the lowest GDP growth during the last four years,” said
Asad Umar, former CEO and president of Engro (Pak) Limited.
“Inflation has also registered sharp growth during the period,”
he added.
Inconsistent
government policies and security concerns hampered the investment
flow in the country, as it came down to 12.5 percent from 22.5
percent during the last four years, he said, adding that the foreign
direct investment also declined to less than $1 billion from $6
billion.
Umar,
who recently joined Pakistan Tehreek-e-Insaaf, said the abysmal
situation can be gauged through Pakistan’s per capita income, which
will be doubled in 70 years, whereas in case of India it will take
only 12 years.
He
criticised the cost of the current expenditures as Rs1,000 billion
has been spent under this head, while no addition was made in the
development expenditures during the period under review.
Umar
said that the debt-to-GDP ratio is not alarming, however, the
interest payment is the main problem. Quoting figures, he said that
three years ago the interest payment was 41 percent, which has now
increased to 64 percent.
The
fiscal deficit for FY12 will be around eight percent and estimation
of this head for FY13 is fabricated.
Syed
Shabbar Zaidi, leading tax expert and partner, A F Ferguson,
Chartered Accountants, portrayed the similar picture of the economy,
saying that the country is heading towards difficult economic
situation. “Around Rs1.5 trillion debt burden is accumulating
annually,” he said, adding that the total debt burden is around
Rs12.5 trillion.
The
government has provided power subsidies of Rs500 billion when
electricity was available half a day. “It will be worst if
subsidies are reduced or no addition to the national grid was made,”
he added.
Zaidi
said that the tax system should be equitable and all taxable income
must be taxed. “Tax machinery is concentrated only on major cities
for revenue collection purposes,” he added.
He
identified that retailers and agriculture trading contributions are
not paying their due income tax liabilities, while provincial
governments are highly insufficient in tax collection, he added.
He
suggested the government to bring down the sales tax rate to 10
percent, while approving the Finance Bill, 2012 in order to give
relief to the masses and eliminate under-invoicing in the Afghan
Transit Trade. The efforts of the Federal Board of Revenue (FBR) in
total revenue collection during the current fiscal year are only 15
percent, while the remaining is the impact of inflation.
About
the energy crisis, he said that it should be depoliticised. “People
demanding electricity are not paying their taxes,” he added.
Shahid
Hussain Jatoi, chief commissioner of the Large Taxpayers Unit,
Karachi, expressed concerns over the present state of the economy.
“In the past, not much has been done to boost the economy,” he
admitted.
There
are two options for the country either begging for more loans to
foreign lending agencies or increase revenue collection at home, he
said, adding that all the citizens, including politicians,
bureaucrats and businessmen have the responsibility to contribute
towards the national exchequer.
He
advised the taxpayers not to give money as bribe to tax officials.
Ali
Rahim, former president of the Karachi Tax Bar Association (KTBA),
presented changes in the direct taxation through the Finance Bill,
2012.
The
government should tax agriculture income by bringing middleman into
the tax net, he said.
Adviser
to the Sindh chief minister on investment and the former president of
the Karachi Chamber of Commerce and Industry Muhammad Zubair Motiwala
said that the budget projected a deficit of around Rs1 trillion, but
fails to mention the strategy to bridge the gap.
Since
going to the International Monetary Fund (IMF) during an election
year would be a very unpopular move and the government should come up
with a plan to deal with the mounting deficit.
Ashfaq
Yousuf Tola, partner, Naveed Zafar Ashfaq Jafferi and Co. said that
the government should bridge the tax gap, which is around Rs700-800
billion.
Anis-ur-Rehman,
chairman of the Karachi Branch Council, ICMAP, said that the
government had set an ambitious revenue target for FY12/13. He
presented highlights of the budget and changes brought in through the
Finance Bill, 2012.
No comments:
Post a Comment
Note: only a member of this blog may post a comment.