Speakers for reforms to boost tax-to-GDP ratio

Pakistan is in a dire need for tax reforms to boost tax to GDP ratio which is one of the lowest in the world. It is a matter of concern that in the population of over 186 million, 5.7 million are eligible taxpayers, 3.6 million are tax registered, 0.8 million are tax filers and only 0.5 million are direct taxpayers. Government would have to initiate tax reforms in consultation with the stakeholders to bring untaxed sectors into the tax net.
This was the upshot of the speeches delivered at a seminar on "Tax Policy & Tax Administration Reforms" jointly organised by the Lahore Chamber of Commerce & Industry (LCCI) and Research and Advocacy for the Advancement of Allied Reforms (RAFTAAR) here at the LCCI on Thursday. LCCI President Sheikh Muhammad Arshad, Senior Vice President Almas Hyder, former Finance Minister Dr Salman Shah, former Economic Advisor of the Ministry of Finance Sakib Sherani, Fasi Zaka, Dr Ijaz Nabi, Mustafa Omer, and former LCCI President Bashir A Baksh were amongst the prominent speakers.
Former Finance Minister Dr Salman Shah said Pakistan's economic growth had slowed sharply since 2009, adding the GDP growth has averaged 3.2 percent during that period. He said the significant structural and institutional reforms were needed to re-invigorate economic growth and to improve the income and welfare levels of Pakistan's poor.
He said strengthening the reform process was a two-fold process: it required on the one hand, greater engagement of citizens/public and on the other, preparing and equipping decision-makers to make the case for reform more widely.
Former Economic advisor of the Ministry of Finance Sakib Sherani said economic reform advocacy in Pakistan had been fragmented as different stakeholder groups had pursued their narrow interest, mostly in silos. "There is great opportunity for stakeholder groups to organise and collectively demand reforms from policy makers," he added.
He said Pakistan needed to invest more to growth, adding that Pakistan's spending on core government functions was low. A large part of core spending was financed through fiscal deficits, he said, adding that increasing core spending exacerbates the debt problem which further eroded future fiscal space.
LCCI President Sheikh Muhammad Arshad said that most of the challenges being faced by the economy were directly linked to complicated and lengthy taxation procedures. Therefore, government would have to make taxation system business-friendly through due consultation with the stakeholders as being done in the EU states. He said flaws in taxation system causing loss of billions of rupees to the national exchequer, adding that tax reforms like developed countries could enhance the government revenue. "The Lahore Chamber believes that for the promotion of tax culture in Pakistan, the government would have to bring down the rate of the taxes besides bringing the untaxed sectors into the tax net," he added.
He said Pakistan was the rising star in 1960s and a number of countries adopted Pakistan as role model but now situation was quite different and now those countries were far ahead which were following us. He said in 2007 Large Scale Manufacturing Sector share in GDP, employment and private investment was 12.2 percent, 13.7 percent and 22.2 percent that had gone down to 10.9 percent, 14 percent and 10.1 percent respectively in 2014. It should be an eye opener for the policy makers. LCCI Senior Vice President Almas Hyder said Pakistan's infrastructure quality lagged behind that of comparator countries while the gap with comparators was also widening which should be controlled with effective efforts.