Fozia Azam

Pakistan’s economy is in dire straits since 50% of the economy is undocumented and it cannot be improved without regulating the informal sector, said Minister of State for Finance and Revenue Dr Aisha Ghaus Pasha. Speaking in National Assembly question hour, she said the government will reform the tax system so that more people will be willing to register themselves as legal filers. She outlined two ways in which the revenue collection ability of the government can be enhanced: 1) educating the business community of the benefits of becoming a responsible taxpayer; 2) stringent enforcement mechanisms.

She said that the people of Pakistan lack the civic sense necessary for the collection of enough revenue. That civic sense can be inculcated in them through education and awareness campaigns. After collecting taxes from the people the government provides services like education, health, transportation, defense, and water. She said if enough revenue is not generated it becomes virtually impossible for the government to undertake such activities.

She continued, “the ratio of tax-to-GDP for Pakistan is around 9%, which is lower than the regional peers and very low than the OECD average. OECD average for the tax-to-GDP ratio is upwards of 30%.” Ghaus Pasha further said that “our institutions need to introduce policies which are people friendly and which ease out the process of collection for the people. If transparency and accountability are introduced in the tax-system people will start trusting the system more.”

“We also need to bring those people in the tax net, who have not been registered before so that our tax base can increase,” she added. She also informed the meeting that the danger of defaulting has been averted by the immediate measures of the government. She said, “when we came the IMF program was suspended and we could not borrow from multilateral sources. This is the reason that rupee lost its value and we were looking at imminent economic collapse.” She continued, “we took some hard decisions and thus were able to put the country back on track.

The IMF program got revived, international donors opened their streams of credit, and our national coffers started to fill up again. We are working to revive our exports, increase foreign direct investments in the country and manage our external account balances.” Ayesha Ghaus Pasha said that the global community has assured Pakistan their all-out support in the rehabilitation of the people facing critical situation due the monsoon rains and flash floods in the country recently.

Credit : Independent News Pakistan-WealthPk