‘Staggering revenue shortfall can compel govt to bring in mini-budget’

LAHORE: The Lahore Chamber of Commerce and Industry has feared a staggering revenue shortfall exceeding Rs1 trillion by the end of this fiscal year.

LCCI President Mian Abuzar Shad, Senior Vice President Engineer Khalid Usman and Vice President Shahid Nazir Chaudhry said that this shortfall could compel the government to bring a mini-budget which would place further strains on businesses and the general public.

Mian Abuzar Shad said that the FBR had already missed its collection targets by more than Rs190 billion during the first four months of the current fiscal year and fell short by more than Rs100 billion in October alone. He said that if this trajectory continues unchecked, the consequences will be dire. A revenue deficit of Rs1 trillion is not just a number, it represents a significant threat to fiscal stability.

The LCCI President said that political distractions have diverted attention from pressing economic challenges. The government’s preoccupation with political matters has sidelined urgent economic reforms which would lead to a deepening revenue crisis. He warned that if corrective measures are not taken promptly, Pakistan will face a financial crunch that could derail its economic recovery.

He urged policymakers to shift their focus towards addressing structural issues within the tax system rather than resorting to short-term revenue-generating measures that burden existing taxpayers. The solution lies in broadening the tax base, not squeezing those already contributing.

Mian Abuzar Shad said that the untapped potential within the country’s financial system, particularly the over 100 million bank accounts. This is a vast resource that, if utilized effectively, can significantly boost revenue without adding pressure on the existing taxpayers. He called on the government to adopt innovative and technology-driven approaches to bring these accounts into the formal economy.

The LCCI leadership expressed concern on the recent stopgap measures, such as increased federal excise duties on sugary drinks and higher withholding taxes on imports and services, labelling them as superficial fixes that fail to address the underlying issues. These temporary measures may plug gaps in the short-term, but they are not sustainable and only add to the burden on consumers and businesses.

Mian Abuzar Shad also warned that heavy taxation on imports and raw materials could stifle industrial growth and reduce the competitiveness of local industries. Excessive duties discourage investment, limit production and ultimately hurt exports. This creates a vicious cycle that worsens the revenue shortfall rather than alleviating it.

The LCCI leadership emphasized the need for structural reforms and a collaborative approach to economic management. They urged the government to engage with the business community in formulating policies that promote growth and stability. We need a comprehensive, long-term strategy that fosters economic expansion. The government must bring stakeholders to the table to devise pragmatic solutions.

Senior Vice President Engineer Khalid Usman added that a predictable policy environment is essential for encouraging investment and business growth. “Uncertainty and frequent changes in fiscal policy deter investors. He said that stability and transparency are keys to attracting both domestic and foreign investment.

Vice President Shahid Nazir Chaudhry urged the government to prioritize economic stability over short-term political gains. He said that economic challenges must take precedence. Only a balanced and inclusive approach can ensure sustainable growth.

The LCCI leaders while presenting a series of actionable recommendations to avert the crisis called for broaden the tax base by integrating the informal economy and leveraging untapped resources. They said that the government should enhance tax collection efficiency through digitalization and transparency initiatives.

They said that the government should promote industrial and export-led growth by providing targeted incentives and reducing red tape. Encourage public-private partnerships to boost infrastructure development and job creation. The government should support SMEs and startups with policies that reduce compliance costs and improve access to financing.

Mian Abuzar Shad urged the government to act swiftly and decisively. He said that the time is of the essence. Delays in addressing these challenges will only compound the problem. “Economic recovery and fiscal stability depend on bold, forward-thinking policies,” he concluded.

The LCCI office-bearers said that they are ready to work closely with the government to ensure sustainable economic progress and avoid the pitfalls of a mini-budget. The business community stands ready to support initiatives that promote growth and prosperity but emphasized that immediate action is needed to steer the economy back on track.

Copyright Business Recorder, 2024