It is welcome to note that the Govt has been working hard toachieve the target of one hundred billion dollar exports which is matter of rejoice, but at the same time, the issues of businessmen need to be taken notice of so that they can further accelerate their exports. And for that tax system needs an overall correction. Let us first have a look at the one hundred-billion-dollar exports target and the tax target and then come up to the tax system faults.

In the first meeting of the Industrial Advisory Council (IAC), the presentation of the road map to take the country's exports to 100 billion dollars is rather self-encouraging development, as important proposals are being considered in this meeting.

It is a sign that the government and industrialists are determined to make quick progress in this regard. The said road map has been named "Vision Pakistan 100: Billion Dollar Exports". The Industrial Advice Re-Council consists of the major industrialists of the country who have presented feasible suggestions for increasing exports. In this meeting of December 7, 2023 chaired by the supervising Federal Minister for Industry and Production, Dr. Gohar Ijaz, emphasis was placed on minimizing government obstacles to speed up the export process.

The need to simplify the judicial process was also highlighted as some cases have been in the courts for 10-20 years.

The Council also discussed the proposal to set up separate courts for commercial matters. It was said that the early settlement of business and economic issues and cases will promote foreign investment and domestic industrial development. The meeting also considered the proposal to abolish various subsidy tariffs applicable to various industrial consumers.

The new export and import policy of the European Union, search for gas reserves, keeping gas prices reasonable, making sick companies profitable, proposals for facilitating new business were also discussed.

Emphasis was placed on the implementation of fair taxation on all sectors related to the economy. It was suggested to separate policy making and tax administration.

 It was also proposed to set up Policy and Reforms Commission instead of Planning Commission. It should be expected that the Council's proposals will soon be finalized and pass through the implementation milestones and the target of 100 billion imports will be seen to be on the way to completion.

Now let us come to the tax system of our country. There is a general impression about the national tax system that the government imposes new burdens on the existing tax payers in order to increase revenue and no serious efforts have been made to expand its scope till now, while the financial situation has reached this level that foreign exchange reserves have to be depended on to maintain foreign loans and they are also spent on repaying and paying interest and buying petrol.

The limit is that the IMF, which is known as the last resort to manage a sinking economy, may be unable to impose repeated tax burdens on the same fund and on specific sections.

According to the latest report, its technical team during its two-week stay in Pakistan has asked the FBR to reform the tax system. It has made recommendations to introduce stricter conditions for bringing tax officials, integrity of tax officers, retailers, agricultural income and real estate into the tax net, including fiscal autonomy.

It has been asked to balance sales and income tax on services and create a single portal for their returns. The recommendations said that the FBR should increase the tax rate on real estate both at the provincial and central levels so that real estate is notified and found in the market.

The gap can be narrowed. The IMF team discussed with the Pakistani authorities the real capacity to increase agricultural income and services revenue and make full use of the property tax. The recommendations emphasize this.

It has been given that the FBR should bring reforms in the tax machinery, for which the institution must be fully autonomous so that it is freed from political constraints.

According to the IMF, this clause gives the chairman of the FBR and the secretary of the revenue division such powers. There should be no restriction in which the approval of the Ministry of Finance is required to send the summary to the Prime Minister House.

The installment agreement of 70 crore dollars with the IMF is expected to be done on 11 January 2024, according to which the government has a period of one month and in the next 6 months. These recommendations can be finalized and implemented from the next financial year. FBR reforms included in them, the issue of bringing retailers and agricultural income into the tax net have been raised many times before.

Retailers are of the position that most of them are illiterate about FBR, so they can only pay fixed tax. In the light of this argument, it would be better to consult economists to bring the other 66% defaulters, including them, into the tax net. Concrete proposals should be taken which are acceptable to all.

 Economists are in favor of bringing reforms in the industrial and commercial sectors along with revenues to create economic development and employment opportunities.

According to a survey, 77% of business people say they do not inform the tax authorities about their problems despite complaints because they fear that doing so may lead to interference in their business.

It is a fact that people are afraid of the current tax system, they want a friendly tax culture. There is a dire need in which people willingly pay taxes while living because friendly countries also advise to correct their political and economic affairs instead of taking loans, now Pakistan should make efforts for its internal stability before expecting loans.

Published in The Daily National Courier, December, 11 2023

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