The current economic morass is a result of Finance Minister Ishaq Dar's flawed policies which Prime Minister Nawaz Sharif blindly supports. This was the consensus among the economists, academia, business community as well as general public during an anecdotal survey conducted by Business Recorder here on Friday. Majority of the interviewed people said that while it is Ishaq Dar who convinces Prime Minister Nawaz Sharif on the appropriateness of his policies, yet the Prime Minister is equally responsible for his blind trust on his Finance Minister.
Pakistan's trade deficit widened to $20.20 billion during the first eight months (July-February 2017), up by 34.33 percent from $15.039 billion for the same period a year before and exports declined by 3.9 percent contracting to $13.318 billion as compared to $13.859 billion for the same period of last fiscal year. The country received $4.565 billion foreign assistance from multilateral and bilateral donors in the current financial year, including $1.2 billion short term high interest loans from commercial banks abroad in the current fiscal year, while the number of tax filers is only 1.039 million while tax payers, including those who pay tax on the sims, is around 40 million.
Shumail Daud, President Rawalpindi Chamber of Commerce and Industry (RCCI), told Business Recorder that the Prime Minister is the head of government and the buck most stop with him. If economic policy is flawed and the Prime Minister has no knowledge then it is negligence on his behalf, but if the Prime Minister is aware of flawed policies and continues to blindly support his Finance Minister, then it is his blunder.
He said the small number of tax filers shows that tax reforms have failed and need revamping. The Prime Minister needs to decentralise the system and trust his other team members instead of relying on a single man who is clearly unable to undertake all responsibilities, Daud added.
Chairman Pakistan Apparel Forum Javed Balwani said that Finance Minister Dar is responsible for the dismal economic performance, but it is also the responsibility of the Prime Minister to question him. He said extreme cash flow crunch and high energy prices are hampering export growth and adversely impacting the industry. Finance Minister is responsible for holding their refunds of drawbacks and sales tax, which would have otherwise been invested to enhance production capacity.
Shaban Khalid, former President Islamabad Chamber of Commerce and Industry, said that decline in exports, widening of trade deficit and small number of tax filers constitute a major concern and not a good omen. The government needs to keep a check on these crucial indicators which, unfortunately, does not appear to be taking place, however blaming a single person is not reasonable and the entire government must be held responsible.
Mian Zahid Hussain, Senior Vice Chairman FPCCI, said that except exports, other economic indicators including GDP growth rate and inflation are good. Due to decline in exports, trade deficit is increasing; balance of payment issue is rising and government is compelled to borrow more. However, overall the incumbent government has succeeded in the economic revival of the country.
The Global System Mobile Association (GSMA) in its latest report stated that the current treatment of the mobile sector in Pakistan, including higher taxes and fees, may reduce affordability and lead to inefficient investment decisions. The mobile industry recognizes that its fiscal contribution remains critical to financing public expenditure in Pakistan. However, the current treatment of the mobile sector may be limiting growth in connectivity that could not support each of the seven pillars of the Vision 2025 strategy, said the GSMA report titled Current Overview: Pakistan, a Digital Future: "the mobile penetration and internet usage in Pakistan are notably lower than other comparable markets, and a key factor in this regard is taxation, which may impact on consumers and wider mobile ecosystem".
Prime Institute Senior Fellows Dr Ikramul Haq and Huzaima Bukhari said that bad tax policies were detrimental to the survival and growth of other major productive sectors.
Haq observed that Pakistan's telecom sector was one of the highest taxed in the entire world. Pakistan is one of those countries where SIM activation taxes are still levied. Heavy taxes on the sector have not discouraged usage, but driven revenues and sectoral investment down significantly.
Business Recorder approached a number of students, teachers, laymen, shopkeepers, lawyers, public as well as private sector employees during the survey and all blamed the Finance Minister for the continued economic challenges the country is facing today. However poor election results for the PML-N in the 2018 elections would be because of the flawed policies of Ishaq Dar, was the general consensus.
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