It’s one thing to commit the sin of omission; it’s another to commit that of commission. This year’s annual Economic Survey does not only suffer from sins of omission, details of which were discussed last year as well, but it also contains some downright false and misleading information. (See Economic Survey: Fix it, May 26, 2017)
Take for instance, the following claim made in the survey FY17: restructuring plan of key Public Sector Enterprises (PSEs) is in progress. “These reforms are providing the needed support to reduce financial losses and related fiscal costs, thus creating more fiscal space for various growth oriented projects.”
Contrast that with what the IMF had to say in its first post-programme monitoring report in March 2018. “Privatization and restructuring of key loss-making PSEs have been largely on hold.” “The combined accumulated losses by these PSEs now exceed Rs1.2 trillion (4 percent of GDP), which could eventually lead to sizable demand for budgetary resources,” the IMF said.
But IMF’s remarks are no news. It has been reported and analyzed earlier as well, where it was flagged the progress on even the ADB-funded PSE reform project has been poor, with no substantial progress made so far thanks to slack behaviour by the Q-block. (See PSE reforms: a nonstarter, June 16, 2017, & Pakistan’s backward march, October 4, 2017)
Similarly, take the case of tax reforms. The survey FY18 says: “the government has constituted a high-powered Implementation Committee headed by Advisor to the Prime Minister on Revenue for reviewing the recommendations of Tax Reform Commission (TRC). In consultation with FBR, the TRC has broadly divided its recommendations into long-term, medium-term and short-term categories. On the TRC report, the implementation committee is holding its meetings periodically in which recommendations of TRC are being evaluated so that these could be implemented.”
Now here is the story that insiders from the TRC maintain. “There has been zero progress on any of the agenda items proposed by the TRC. The long, medium and short term categories of reforms were made soon after the report was drafted in 2015/16, but they haven’t been implemented nor have there been serious meetings to this effect whereas FBR’s response is nonchalant,” sources say on the condition of anonymity. “Be it increasing on-demand collection, or fixing FBR’s IT system, or appellate system – or anything else; there hasn’t even been one percent progress.”
The survey’s own table contradicts the so-called tax reform. Between July 2013 and August 2017, some 547,008 notices were sent out by the FBR, of which the total income tax returns enforced were only 216,765 (i.e. merely 40%). This exercise yielded peanuts: Rs5.44 billion. So much for on-demand collection and audit!
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