KARACHI: Chairman of the FPCCI Advisory Board and National Business Group Pakistan, President Pakistan Businessmen and Intellectuals Forum, Mian Zahid Hussain, said that it is impossible to do business in the current situation.
IPPs are draining the country’s treasury; they receive an annual payment of Rs2000 billion as a capacity payment, despite the fact that the closed factories do not generate electricity.
According to Mian Zahid Hussain, the economy can improve if closed IPPs become operational and industries receive electricity at reasonable rates.
He told the business community that setting the electricity tariff for the industries at Rs25, or nine cents per unit, could increase exports to $6 billion.
Otherwise, the inability to purchase electricity at Rs60 per unit will force a record number of businesses to close this year, which will impact both government revenues and employment. He noted that the system will need to run on loans until business and industry become the most profitable sectors of the nation.
Mian Zahid Hussain said that there is an urgent need for reforms in the power and energy sectors. We need to revise contracts with IPPs and conduct a forensic audit of all private power projects.
It is necessary to deal immediately with electricity theft, line losses, and bill defaults. The mafia has a high level of involvement in many important matters, such as electricity, the budget, and the tax system, and they will not tolerate any work that contradicts their interests, he observed.
He said that due to a lack of reforms, many important institutions in the country are collapsing, while the FBR has once again failed to meet its revenue target in the last financial year.
Mian Zahid Hussain said that the FBR has collected Rs9.3 trillion against the original target of Rs9.4 trillion. Top officials are adamant that our system has the capacity to collect more than Rs24 trillion. The claims made by FBR to achieve the tax targets are for the revised target, which was Rs9.252 trillion.
Mian Zahid Hussain stated that improving the FBR system necessitates the appointment of appropriate individuals, the implementation of a digital system to record the economy, and the prioritization of transparency. However, the lack of concrete steps in this regard is regrettable.
Mian Zahid Hussain said that, along with FBR reforms, changes in tax structure are also necessary. To succeed in efforts to widen the tax net, digitising the economy is necessary, as it will increase the tax base, reduce corruption, and create transparency.
Mian Zahid Hussain said that whenever there is a serious attempt to tax agricultural income, the feudal elites end all their political battles and unite. He further said that currently, the country is on the verge of bankruptcy, and the IMF is saving it.
Taxes are levied on the salaried class, but the influential sectors are not taxed; therefore, the tax target will not be met even in the current financial year, and the ratio of tax to GDP will remain low. The increasing burden on tax payers will have serious effects on the economy, leading to a further increase in poverty in the country.
Copyright Business Recorder, 2024
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