The Pakistan Economy Watch (PEW) on Sunday praised the Finance Minister Ishaq Dar for taking steps to regulate the real market which will help government raise billions of rupees and increase the size of documented economy.
The decision is being resisted by the majority of the business community which amounts to help tax cheats as it will convert a good part of the informal economy to the formal one which is in the larger national interest, it said.
The Pakistan's real estate sector has become a save heaven for the corrupt bureaucrats, politicians, criminals, terror financing and crook businessmen, said Dr Murtaza Mughal, President PEW. He said that the formal economy is shrinking since decades while the informal economy has been expanding over time and now it is bigger than the formal one.
Dr Murtaza Mughal said that the decision of the finance minister will increase the tax-to-GDP ratio which is one of the lowest in the world pushing government to beg for the survival. A study estimated that the underground economy was 54.6 per cent to 62.8 per cent of the GDP and expanding at the rate of nine per cent a year.
According to that report, the informal businesses enjoy cost advantage by avoiding taxes and regulatory obligations which allows them to remain competitive despite low productivity. "The informal segment of the economy does not pay direct taxes which limits the impact of policies and weakens resource base of the state.
Dr Murtaza Mughal called for an end to the culture of amnesty schemes as each amnesty is declared to be the last, but the count keeps on growing.
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