Every individual earning more than the exemption limit must pay tax, MQM's Parliamentary Leader in the National Assembly and federal Minister for Overseas Pakistanis Dr Muhammad Farooq Sattar said on Saturday. Presenting the economic roadmap envisioned by the Muttahida Qaumi Movement (MQM) at the Karachi Chamber of Commerce and Industry (KCCI), he said his party had a clear economic vision for the country, adding that all taxable income should be taxed.
This, he said, should be the theme for reform in the budget for the next fiscal year (2012-13). Broadening the tax base, he said, would enhance the income tax collection without increasing the tax rate. He reminded policymakers that currently, the ratio between direct and indirect taxes was 32 and 68 percent, respectively and said that it would improve to 40 percent and 60 percent, respectively.
The MQM, he said, had suggested the government to reduce General Sales Tax (GST) from 16 percent to 12 percent for reducing prices of essential goods, helping reduce the burden on common men. Stressing the need for reducing maximum duty on imports to 10 percent with a minimum limit of 5 percent to curb under-invoicing, smuggling through Afghan Transit Trade (ATT) and to eliminate the SRO culture.
Dr Farooq Sattar said the 10 percent petroleum levy should be abolished to provide relief to industrialists and the general pubic, adding that it would help cut the cost of living. The State Bank, he suggested, should reduce the discount rate from 12 percent to 10 percent to bring down the cost of doing business, cost of manufacturing, adding that the move would also result in cutting the government's cost of borrowing.
Referring to loss-making government-run organisations, he said that subsidies given to PIA, railways and steel mills should be withdrawn. He said that these organisations should be converted into profit-making entities by adopting appropriate measures.
About the energy sector, Dr Farooq Sattar urged the government to give top priority to the energy sector in the next fiscal year's Pubic Sector Development Programme (PSDP) to resolve energy crisis. He was of the view that PSDP allocations should be equally divided in two parts, one for the energy sector and the other for other pubic sector development projects.
Terming the next year's budget a real defining moment in Pakistan's history, he said that it should be used for bringing a paradigm shift in national economic policies. The aims, objectives and salient features of a robust and vibrant economy should be an equitable opportunity for all citizens to contribute in the country's economic growth and development. Referring to the agriculture sector, he said that maximum land holding should be prescribed and absentee landlordism be curtailed.
1: Market mechanism be fully implanted in the agriculture sector with the abolition of support price for farm products. This will substantially relieve the burden on the national exchequer. 2: Promotion of co-operative farming be initiated to achieve production in fragmented holding. The government should aggressively pursue co-operative farming.
The national economic policy, he said, should provide special incentives for small- and medium-scale enterprises (SMEs) sectors, adding that the government should ensure credit availability and infrastructure be ensured for the SME sector. He also said that value-added industrialisation should be focused, as validation would ultimately increase the per unit price of export products and competition against import.
Urging the government to aggressively pursue pubic-private partnership projects, he said that it would provide efficient management with low capital outlay of government. This will reduce budgetary pressure on the government. Overseas Pakistanis, he said, should be encouraged to participate in these projects.
Suggesting ways to overcome housing shortage and provide shelter to low-income groups, he said that low-cost housing schemes be encouraged and residential facilities for lower middle class be made available through a comprehensive low-cost housing programme with government support.
Pleading for the devolution of fiscal and financial powers to local bodies, he said that these bodies should be encouraged to effectively earn in revenue areas. Regarding the domestic law and order situation, he said that MQM encouraged peace and stability and maintenance of law and order in Karachi, he said. Pakistan's economy, he said, was essentially based on peace and stability. According to him, Karachi contributes more than 60 percent of revenue. He said that the role of elected local bodies should be improved, turning them into economic engines for growth, especially in areas of infrastructure and transport.