The Federation of Pakistan Chambers of Commerce and Industry’s Businessmen Panel Chairman Mian Anjum Nisar has opposed the government commitment with the IMF to increase taxes by a Rs1.27 trillion in the coming budget, suggesting the economic team to convince the lender for softening its conditions so that government could pursue its pro-growth strategies through some incentives for the industry.
“We fully back Prime Minister Imran Khan who is considering to approach the IMF for relaxation in its loan conditions as the country sees disruptions in the near future on account of the corona infection’s resurgence. In fact, the government is in a difficult position, as it cannot grow the economy rapidly through incentives to the trade and industry if it has to implement the harsh IMF stabilization policies,” said the FPCCI former president.
According to reports, the government has given an undertaking to the IMF that it would continue increasing petroleum levy on oil products to the maximum level this year to collect over Rs510 billion, instead of the budgeted target of Rs450 billion. The petroleum levy target for the next year has been set at over Rs600 billion while the provinces have given an undertaking to provide Rs570 billion cash surplus to the federal government and increase it to Rs730 billion. He termed it very unfortunate for the trade and industry that the government also promised to the IMF that it would continue making electricity tariff adjustments next year on quarterly and annual basis through Nepra, jacking up electricity prices by almost Rs5 per unit during the last quarter of 2020-21. The government has also given an undertaking to make adjustments in gas tariff and not to consider any tax exemption to the industry in future, hitting the economy of Pakistan hard.
The FPCCI former chief said that the country’s economy is witnessing an unprecedented damage under the government’s controversial agreement with the International Monetary Fund, as it has wreaked havoc on the industry by unleashing a slew tsunami of unbearable hike in prices of utility. The government has also indebted Pakistan to the point of crisis, and has now taken us into a situation where the central bank is being made totally unaccountable to Pakistan’s parliament, which does not seem to be sound. The government must give the SBP reasonable autonomy to make monetary policy, but don’t open up the county to ups and downs of international capital and its dictation, he said.
Mian Anjum Nisar said the tax collection target for the Federal Board of Revenue in next year’s budget has been committed at Rs5.96 trillion against Rs4.69 trillion revised target for the current fiscal year. About Rs500 billion will be additional tax generation through general sales tax and a personal income tax reform with the 2021-22 federal budget, which does not match to the ground realities. Under the agreement, the government would also bring down the current year’s development program to Rs1.169 trillion against budgeted target of Rs1.32 trillion, resulting in slow growth and unemployment in the country.
What the businessmen see today is a very worrying meltdown without any matching capacity for increasing direct taxation or actually widening the tax net. As a result, presently we are totally exposed to debt, impoverishment and miss-governance on an epic scale, he said. Criticizing the government’s economic policy, the BMP Chairman said the country’s total debt had reached Rs44 trillion, which is around 90 percent of the GDP, while circular debt is likely to reach a whopping Rs4.6 trillion in 2023, with Foreign Direct Investment (FDI) declining by 30 percent and the World Bank’s GDP growth forecast of just 1.3% this year, the lowest in the region.
The Businessmen Panel chairman said that during pre-Covid time the economy was on the track with 2.4 percent growth rate till March 2020. However, after May 2020, it witnessed a decline by 1.5% as resources were diverted towards Covid-19 mitigation and containment. In the current situation and amid the third wave of the pandemic, growth is projected at 1.5% of the GDP and inflation will remain volatile.
He emphasized the need for structural reforms as well as widening of tax base through ambitious tax policies and broad-based fiscal structural reforms for high economic growth and employment generations.