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The federal government should include road preferences, to describe in the next budget, mobilize taxes, manage loan management, control inflation and investment and industrial growth, as well as reforms in energy and social sector.
It will not be easy. National GDP growth is still lower than the population growth rate. The high growth pace in the past had mobilized the running inflation. In the last three years, the economy has been strengthened through the central bank’s reforms and sensible monetary policy. However, as a result, there has been widespread unemployment.
If the government tries to weaken recent reforms or fail to introduce similar reforms proposed by the IMF as well as Pakistani economists, it will take a risk of stability. Financial transparency is still low.
The government is in a weak financial state. He has to deal with major budget deficits and interest payments on the loan. Business associations can demand tax periods and more concessions. However, the government cannot afford to relax the tax unless it is fulfilled by the acquisition of taxes. The privileges will potentially be related to the sector (eg, exports, IT, SMEs) rather than widely -based concessions.
The government will be strictly pressured to increase the tax base to increase direct tax collection and reduce the dependence on indirect taxes. Debt management is also a very serious problem. There is an urgent need to reduce the fiscal deficit and ensure sustainable loan service.
Reducing the policy rate by the Central Bank has given the government a great relief to reduce the burden of serving its loans on domestic loans. The relatively stability of the exchange rate has also stopped a permanent increase in foreign loan service.
Inflation is finally under control. However, low inflation has declined as consumers are still struggling as a result of more inflation. Many people do not even have the money to buy the necessary items. Low inflation has also reduced the ability to collect tax.
The government will have to find a way to deal with the current inflation that targets luxury consumption and maintains food prices. It would be a challenge to deal with high inflation by providing target relief to weak groups.
Investment for industrial growth is another challenge that the government needs to resolve in this budget. It wants to draw policies directly to attract direct investment and support SMEs and export -based industries. SMEs should offer development from now on and provide jobs.
The energy sector has been badly mismanaged. We are now forced to buy high cost electricity from fossil fuel plants under the sovereign guarantee provided to private power generators. There is a need for low -cost alternative energy solutions, but the compulsion to buy electricity from foam -based fuel -based generators has reduced the transfer of alternative energy solutions.
The policy of relaxation about taxpayers has to be abolished. Strict action against non -filers should be initiated. The state should connect business registration, utility contacts and property transactions with tax compliance.
Recent talks with some private power generators have slightly reduced the need for guaranteed capacity compensation. More important than rehabilitation of these agreements needs to be improved and practically efficient to companies. The IMF has in fact asked the government to replace its board with private sector professionals. It is yet to be fulfilled.
There is a dire need to eliminate the power transmission sector and increase the capacity of transmission lines. The issue of corruption in the power sector is largely restless. Half -heart efforts in this regard have not proved to be an effective obstacle.
The development of the social sector has long been neglected. In the next budget, spending on education, health care and social safety nets should be greatly increased. Since there is a lack of resources, it may need to reduce non -productive costs.
The government faces many challenges in the preparation of the budget. The biggest problem is to eliminate the fiscal deficit, while meeting the situation of the IMF and ensuring enough tax revenue for government spending. The government will also face pressure to keep inflation, external debt payments and maintain political stability in a strict economic environment.
Traders’ contribution to tax revenue is unpleasant. The fixed monthly tax scheme is a non -starter. Under this head the collection is below Rs 20 billion. This is compared to Rs 340 billion paid by a salaried class in the first nine months of this financial year.
A retailer working from a small shop pays at least Rs 3,000. There are 22 million shops. If each of these shops pays Rs 1,000 a month, possible income will be Rs 22 billion every month or Rs 264 billion per year. This can change the game for Pakistan’s tax revenue. However, to ensure compliance, it requires severe implementation and political will.
Currently, less than 5 % of traders pay more than the monthly tax. They should be exempt from the scheme they already pay due to taxes. If the traders do not bring in the tax net, then Pakistan will be subjected to a raid.
The government has to ensure that the traders begin to contribute to tax revenue through a simple, viable system.
The business transactions should continue with the tax that stops it to ensure that all bank accounts or business transactions with business transactions are imposed. The point of sales integration and sales tax have proved an effective tool that has increased tax revenue. Increasing the electronic POS system will help reduce under -reporting. Traders’ associations who make long claims about tax compliance by their members should be encouraged to organize tax collection.
The policy of relaxation about taxpayers has to be abolished. Strict action against non -filers should be initiated. The state should connect business registration, utility contacts and property transactions with tax compliance.
The salaried class is already pressing taxes. Although taxation can provide some economic relief, it is unlikely to successfully increase its tax base by incorporating retailers and informal sectors by incorporating retailers and informal sectors. At least the government can reduce the tax burden on low -salted employees (up to 100,000 rupees) and collect the money by increasing the tax on luxury goods by 2 %.
The author is a senior economic reporter.
