Punjab Minister for Finance Hasnain Bahadar Dareshak has said that the government is alive to the deteriorating state of affairs and is in the process of taking a number of measures to put our financial and fiscal house in order.
While addressing a pre-budget seminar organised by the Institute of Cost and Management Accountants of Pakistan (ICMAP) at the Lahore Chamber of Commerce and Industry (LCCI) here on Wednesday, he said that debt servicing and defense expenditure eat up a whopping share of our current revenues. In spite of the fact that a lot of funds are arranged through deficit financing, still very little is left for development and revenue expenditures.
The minister further said that Pakistan has long been experiencing reversionary trends. 'Our cash strapped position caused by massive national debt has kept our economy at very low ebb. By increasing revenues and exports we could have salvaged the position, but things have never gone the way we have been planning' he added. The ground reality is that we usually find it difficult to generate enough revenue and increase exports whereas the expenditure position has all along been getting inflated due to inflationary trends. In short the economy has been virtually in shambles, he maintained.
He further said the pre-budget seminars play an important role in mobilising public opinion to frame suggestions for assisting the governments in preparation of national budgets. The suggestions put forward by the Cost and Management Accountants have usually proven very useful for the government, he said.
LCCI President Shahid Hassan Sheikh said that due to consistent efforts made by the sitting government, there has been considerable improvement in the macroeconomic indicators of the country. The GDP growth of the country has averaged 7 percent; there has been a considerable improvement in the foreign exchange reserves of the country and record increase in exports and foreign direct investment. 10 to 15 percent increases has taken place in industrial production owing to continuity of industrial policies and there has been increased public spending in the social sectors, which are appreciable, he added. However, the government needs to give priority to the sectors like primary education, population control, energy security, agriculture and engineering etc.
Apprising the participants of the LCCI budget proposals, he said that recovery under the sales tax increases the rate of sales tax should be correspondingly reduced, which would not only encourage new people to get registered but would also help in reducing inflation. Rate of tax should also be reduced with the increase in the direct taxes eventually leading to phasing out of the withholding tax gradually, he added. Furthermore the law of the country should not allow any person to do business unless he is registered in the tax net of the country, he maintained.
Speaking on the occasion, Professor Dr Khawaja Amjad Saeed said the results of the fiscal policies adopted by this government have yielded positive results and national economy was now treading fast on the road towards economic turnaround. He stressed the need to minimise dependence on indirect taxes and said that Rs 450-500 billions would be available for the next year development programme. He said that government was working on a 3-year plan, however efforts should be made for a sustainable 5-year programme. He also proposed to merge federal excise duty into the sales tax in next year budget. He said that provinces are getting 27 percent share from the federal pool; however, it should be increased up to 50 percent to satisfy the provinces.
Muhammad Azam Khan Shad urged the government to provide funds for the development of hydro projects ie Kalabagh Dam or any other mega project, allocate sufficient financing/technical expertise for development of Lakhra/Thar coal fields on fast track basis. Government should encourage the alternate fuel projects and withdraw to excise duty on oil/gas used for power generation and GST from power sector.
He was of the view that there should be improvement in hydel/thermal policies and restructuring plan of Wapda and reduction in consumer tariff especially for industrial, agriculture and domestic by withdrawing taxes and duties.
Naveed A Andrabi, President, All Pakistan Tax Bar Association and Mirza Munawar Hussain, Member National Council of ICMAP made their presentations while Zia-ul-Mustafa, of Lahore Branch Council also spoke on the occasion.