The Pakistan Economy Watch (PEW) on Sunday said that continued political instability had compromised government's ability to generate revenues which would result in increased debt burden inflation, and mass unrest.
Generally governments rely on taxes, exports, debt and printing currency to meet their expanses but Pakistan has last two options as there is no desire to broaden tax base or trigger exports, President PEW Dr Murtaza Mughal said.
He said that economy has never responded positively to uncertainty hence insufficient tax income will force the government to borrow more from different sources increasing debt burden which has already crossed over 60 per cent of the GDP. Alternatively, government can opt to print currency eroding exchange rate and triggering inflation, he added.
Dr Murtaza Mughal said that despite austerity claims, the government's expenditure continues to rise but tax collection, the primary source of income, continues to dip resulting in persistent budget limitations. The highly flawed tax system in Pakistan has helped rich to get richer on the cost of poor paving way to mass unrest, social problems and misbalanced budgets.
Dr Murtaza Mughal said that distorted distribution of wealth has reached new heights due to policy of unjustified exemptions, heavy reliance on indirect taxes which are bleeding the poor white.
The Government continues to provide incentives and exemptions to business community, especially manufacturers which augment their profits while ignoring the middle class and poor on whom burden in increasing by the passage of every day, he noted.
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