KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Wednesday said that documentation of economy is a must to bridge fiscal deficit.
In this regard FPCCI president Iran Iqbal Sheikh formed a high-powered Budget Advisory Council to suggest budgetary measures – both on revenue and expenditure sides under the convenorship of Zakaria Usman, former president.
He has emphasized documentation of economy to bridge fiscal deficit. Every year Pakistan faces revenue shortfall to meets its current and development expenditure; and, ultimately negotiates with foreign funding agencies under strict conditions.
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Irfan Iqbal Sheikh added that under the aforementioned backdrop, this year FPCCI urged the government to bring undocumented and informal sectors in documentation to evaluate actual size of the economy and amount of revenue which is out of the tax net.
In its first meeting, FPCCI’s Budget Advisory Council members shared their comments on the future of Pakistan’s economy and formulation of budget 2023 – 2024.
The council identified the most serious challenges that need to be tackled in the upcoming budget 2023 – 24 is the undocumented or informal sector of the economy; which is the main cause of structural weaknesses; and, a resistant to any policy-induced reforms.
Irfan Iqbal Sheikh said that the taxation system in Pakistan is a hurdle in the ease of doing business; and, tax leakages should also be controlled. High tax rate is a hurdle to broaden the tax base. Data of non-filers is available and FBR should bring them into tax net.
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The members of the council criticized that the ever-increasing burden on existing taxpayers (filers) will continue; if the present tax net is not broadened. The council also disapproved the philosophy of increasing interest rates; while the inflation, despite high rates, is continuously going up.
Suleman Chawla, SVP FPCCI, highlighted the widening trade deficit; which has increased significantly; and, it is required to take strong and out-of-the-box measures to shrink the gap which is continuously putting pressure on foreign reserves.
FPCCI’s Budget Advisory Council suggested industrialization and import substitution as the solution to overcome trade deficit and pointed out that IT industry has the potential to bring foreign exchange; but, the sector is still not fully tapped. The council observed that the SMEs sector of Pakistan has improved and producing quality products and now is the time to support the sector.
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Zakaria Usman, former President of FPCCI & Convener of the Council, stressed that the agriculture sector of Pakistan has potential; but, facing various challenges. If Pakistan can produce 20 million or more bales of cotton, then it would become a prosperous nation. Wheat cultivation area has also reduced from 24 million acres to 21 million acres; and, on the other hand, agricultural lands are being utilized for real estate.
FPCCI proposes that Agri-SEZs should be promoted and supported with TERF scheme. The policies are being made to empower women; but, unfortunately, women are not given enough opportunities in the economic activities. No country can progress without women participation and the government of Pakistan should focus to bring women into the workforce. The council also suggested job opportunities for youth and curtailment of unnecessary expenditures.
The council also showed concern over low level of regional trade due to problems in SAARC, Iran and Afghanistan; which is also an impediment to explore Central Asian markets and beyond.
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The council members also suggested that in the tax collection from Karachi, some percentage share to be given to Karachi’s infrastructural development. FPCCI members should also be in the board of FBR’s IRS.
Irfan Iqbal Sheikh reiterated that due to high inflation, purchasing power of the consumers has been critically reduced; which is badly affecting industry; and, the government should do everything to control inflation. Structural reforms are required; austerity measures should be adopted and pace of privatization process must be increased to save precious revenue of the government. Additionally, a targeted amnesty scheme for industry is indispensable now, FPCCI chief added.