Reforms without transparency ineffective

LAHORE: Tough economic decisions at the expense of the poor to generate more revenues are the same that the International Monetary Fund (IMF) has recommended even two decades ago after its failure to convince the rulers to generate revenue from the rich.

Economy cannot be improved through public appeasing decisions or through tax exemptions to the influential. Economy also needs harmony across political divide for growth.

Political harmony needs efforts both from the ruling party and major opposition parties. The loss-making public sector companies, for instance, are a heavy burden on the national exchequer and; therefore, privatisation of these entities is the only viable option.

Revamping or restructuring of loss-making state-owned enterprises has failed many times. The privatisation policy should also be transparent,as the state cannot exempt loss-making company of its choice from privatisation, as is being done in the case of PIA these days.

Political parties oppose privatisation when in opposition and favour it when in power. The ruling party, in order to grab some additional resources, also tries to privatise profit making entities. It is easier to privatise them. The two RLNG plants based in Punjab are operating on profit, as these enjoy the same guaranteed profits enjoyed by the independent power producers. Ideally, the government has no business in doing business. It should be the facilitator of business and trade through transparent and prudent policies and fair implementation of the rules and regulations.

There is no guarantee that the public sector companies, operating in profit today, would not become inefficient with the passage of time, as was happened with all other loss-making public entities.

PIA, once the pride of Pakistan, has now become a symbol of shame because of its performance and service. Railways has deteriorated over time from profitable operator to loss-making entity. So, as a principle, all government-run commercial enterprises should be privatised.

However preference should be given to loss-making companies so that huge bleeding of resources could be arrested. Privatisation; however, is a hard nut, which cannot be crushed without taking opposition parties on board.

Unfortunately, the present government has shut all doors for negotiations with the opposition parties. The opposition parties should also forge a common economic strategy in the national interest to support privatisation.

Common man is not prepared to pay heed to the oft-repeated slogan of trusting the government and bear some pains for their wellbeing in future. Pakistan is facing resource crunch that has been amplified by almost trillion rupees annual losses of public sector companies. Government expenditures are higher than its income. There is a need to increase the income in a sensible manner by plugging the loopholes in the tax machinery. This could only be done through 100 percent transparency in the government affairs.

Resources would have to be generated according to the capability of each segment of the society. The economic team should come up with a sound and tangible strategy to ensure equitable taxation that spares the poor and targets the affluent segments of the society.

It is criminal to generate 80 percent of the taxes indirectly (advance income tax is also an indirect tax, as it is made part of the cost by most businesses).

Levies on petrol, gas surcharges, sales tax, excise and Customs duties are such taxes that are recovered by the rich from the poor with interest. In fact, many manufacturers conceal their actual production to save sales tax, excise duty and under-file their import invoices to pay less import levies. They pocket these government taxes on their products by charging the unpaid taxes from the consumers.

The economic reforms, particularly transparent collection of taxes and expenses, could only be achieved, if the political parties agree on one common agenda.

Politicians in the neighbouring India and Bangladesh pursue a common economic policy irrespective of the party that comes to power, which has strengthened their economy.

We need to do the same. This time around instead of asking the common man to suffer further pain, the planners would have to ensure that all tax evaders and under-fillers not only pay their due taxes, but also share their booty with the workers by providing them daily use items at subsidised rates.

All exemptions would have to go. It will increase the tax revenue and lessen the need to borrow. Currently, the government, as the major borrower, has ensured high profitability of banking sector only while crowding out private sector loans.