'Multi-pronged plan needed to end economic woes'

There is no out of the box solution to solve the economic problems in the short-term, as the only available option to stabilise the economy includes greater transparency in the working of the government, broadening the tax base and concrete measures on expenditure side, according to economists.
The implementation of Reformed General Sales Tax (RGST), enforcement/administrative measures and legal action against non-compliant registered persons is critical to document the economy. Returns must be filed by all those liable to file the same under the provisions of the Income Tax Ordinance 2001, and this would increase tax to GDP ratio by bringing the rich into the tax net, said Dr Zafar Mateen Nisar of Pakistan Institute of Development Economist (PIDE).
Talking to Business Recorder, he said that a multi-pronged strategy envisaging immediate, medium and long term measures is required to deal with the country's economic problems. Zafar said that out of the box solution means that the conventional way is not workable and a new approach would be required to solve the economic challenges. But any new strategy or approach can not solve immediate economic problems and would be viable only as a long term option.
In reply to a question, he said that immediate measures on expenditure side could be magnetisation of perks and privileges of bureaucracy to plug the leakages of resources on account of petrol and utility bills. The effective utilisation and management of government offices could be another step that would lower expenditure. Renting private buildings must be curtailed by improving management of government buildings particularly after the transfer of 25 ministries to the provinces with the passage of the 18th Constitutional Amendment. These measures would save energy and transportation cost.
On revenue side, Zafar said that implementation of the RGST was critical for documenting the large parallel black economy. However, he urged that implementation of RGST must minimise the inflationary impact on essential commodities with the focus on increasing sales tax registrations. He said that reforms in education and bureaucratic systems could significantly improve governance and ultimately benefit the economy.
Dr Zahid another economist concurred by stating that out of the box solution was not for the short run. He too urged greater transparency, focus on restructuring State Owned Entities (SOEs), and making the rich pay taxes. He said that fair and performance based distribution of resources at district level was required to remove disparities and move towards development. He stated that the government must allocate Rs 2 billion to each district for the next five to ten years but quarterly and annual fund releases must be linked to performance and the funds of poorly performing districts should be transferred to other better performing ones.