Pakistan Muslim League-Nawaz (PML-N) is determined to bring about fundamental and far-reaching reforms and changes in the country's economic landscape, PML-N senior leader Mohammad Pervaiz Malik said. Talking to Business Recorder, Malik said that PML-N's top priority would be the revival of the economy to double the GDP growth rate from less than 3 percent in the past five years to over 6 percent in the next five years.
According to him, sustainable and inclusive economic growth requires optimum utilisation of the country's physical and human resources and full use of technological advancement in industry and agriculture. Highlighting PML-N's economic agenda, he said that sound macro-economic policies were needed to reduce budget deficit and resolve balance of payment issue, curb inflationary pressures and reduce country's dependence on foreign loans and assistance.
He said that if Allah Almighty provided an opportunity to PML-N a result of 2013 polls, the party would give special priority to higher investment in the energy sector, attracting foreign investment in the agriculture and livestock sectors, converting at least 50 percent of the remittances by overseas Pakistanis into investments, pursuing mineral exploration and abstraction with renewed vigour while ensuring absolute protection of the interests of the nation. He said, "As a part of our economic revival plan, PML-N is setting the following targets to be achieved during its tenure:
1. Budget deficit will be brought down to 4 percent. This will be achieved through:
a. Increase in revenues. Tax to GDP ratio to be increased from 9 percent at present to 15 percent by the end of 2018.
b. One-third reduction in current expenditures other than salaries, allowances and pensions.
c. Losses from State Enterprises amounting to approx. Rs 400 billion will be reduced through revamping/privatising these institutions.
2. Inflation will be brought down to single digit in the range of 7 or 8 percent by limiting government borrowing, decreasing tax rates, reducing energy shortage and cost of producing energy, lowering interest rates through effective monetary policy and removing supply side bottlenecks through increased agricultural output and reduced wastages.
3. Industrial manufacturing will be taken up to 7 or 8 percent.
4. Investment to GDP ratio will rise to 20 percent.
Other initiatives for economic revival would include:
a. Open up markets and encourage regional trade. This will open up avenues for investment, growth and jobs.
b. Large investment in human capital with improved service delivery in health and education.
c. Further reforms in financial sector and capital markets.
d. Improved regulatory environment on national level.
e. Focus on youth and women.
f. Reducing bureaucratic procedures to speed up decision making.
Malik said that a national economic agenda 2025 would be developed with consensus for continuity in economic policies.
The PML-N leader further said that sustained growth was not possible without macro-economic stability.
During the past five years, he said, Pakistan has more than doubled its debts and the annual debt servicing has crossed Rs 1,000 billion. Pakistan's total public debt which was less than Rs 3,000 billion on June 30, 1999 has increased to over Rs 13,500 billion by the end of 2012, he added. "We will ensure that as a result of sound macro economic policies, public debt remains at sustainable level," he said. He said the most important area where fundamental and structural reforms were required was the taxation side.
Pervaiz Malik said that when PML-N government was dismissed in October 1999, tax to GDP ratio was 13.8 percent, which declined to around 9 percent. Through reforms in FBR and the tax system, the PML-N will attempt to improve the tax to GDP ratio to 15 percent by 2018. Informal economy will be brought into the tax net. Tax base will be broadened, he added.
According to him, the basic objective of the Tax Reform Program of PML-N will be: a) To tax all income and to achieve greater equity in the tax system by increasing dependence on direct taxes. b) To broad base the tax system through greater use of an IT data base.
c) Reduce tax evasion by facilitating tax payers' compliance, and where possible, rationalising tax rates.
d) Reform of tax administration both at the federal and provincial levels.
e) An annual tax directory will be published indicating the taxes paid and assessed in the last 3 years.
f) No increase in the tax rates. Once the tax system becomes fully operational, tax rates will be reduced over a period of time to ensure regional equity and to encourage foreign investment.
g) Provincial governments will be asked to increase their own tax revenues to increase their contribution in overall taxation.
h) Sales tax to be rationalised by ensuring standard rate for all items and broadening the scope of sales tax.
i) Simplify the administration of taxes and compliance especially for small businesses.
j) Steps will be taken to ensure elimination of money laundering and whitening of black money.
k) Improve the process of self-assessment and audit compliance.
m) To discourage import of luxury items, a regulatory duty will be levied on non essential imports.