KARACHI: Pakistan Business Council has proposed a hard-hitting reforms' plan to reverse the downward spiral in incomes and living standards, with a focus on putting the economy on a sustainable...
KARACHI: Pakistan Business Council (PBC) has proposed a hard-hitting reforms' plan to reverse the downward spiral in incomes and living standards, with a focus on putting the economy on a sustainable growth trajectory.
“The proposed 'Pakistan Economic Reforms Programme' (PERP) also aims at addressing the fundamental flaws leading to Pakistan’s recurring crises and to correct the quantum and quality of public spending on physical infrastructure, human capital and nurturing nature (agriculture, water and the environment),” the PBC said in a statement.
The programme suggests that all income beyond a certain threshold, irrespective of source, should be taxed; fiscal policymaking be separated from collection of taxes; an audit function independent of the FBR and preferably composed of the leading firms of accountants be established to inspire confidence of tax payers; human resources in FBR be completely overhauled; training and deployment of technology be given a heightened focus; temporary relief be provided to the FBR from chasing unrealistic tax collection targets until the restructuring is completed; inconsistent and unpredictable fiscal policy, prone to knee-jerk changes, and taxation of the already-taxed to meet revenue targets be discouraged.
On the other hand, the programme also calls for an end to the use of SROs to exempt or provide indefinite relief to certain sectors/taxpayers, withdrawal of the fundamentally flawed turnover-based minimum tax, if necessary, in a phased manner so as not to impact tax revenues. It also suggests gradual reduction of the income and corporate tax rates and removal of disparity between taxation of profit distribution by companies and withdrawal of profit from business by sole traders and association of persons etc.
On the export sector, PBC proposed a 5-year National Charter for Exports, owned and monitored by the Prime Minister to give export the consistent priority that it deserves and make them an integral part of an industrial policy, promoting manufacturing, including sensible import substitution.
The council said a stand-alone export policy without strong linkages with manufacturing and imports was not sustainable over the long run.
“A National Industrial Policy will perforce address all elements of manufacturing, including exports and import substitution.”
It said export incentives were funded by taxpayers and required proper accountability and recommended this should be done for each sector at least on an annual basis and their continuation or adaptation be contingent on meeting prescribed, medium- to long-term objectives.
The PBC called for marketing and selling branded goods costs more than selling simple commodities as the present 10 percent export retention allowance was unable to adequately cover the cost of establishing a brand, registering the products with supermarket chains, paying for shelf rentals etc.
“These costs are high in the early years of market entry and such costs, incurred abroad, may be allowed at actuals, subject to audit or other verification.”
The business body also called for a state-sponsored National Brand Building Programme and recommended that Pakistan’s foreign policy should consist primarily of economic diplomacy.
“Pakistan should not belong to any camp and its leaders must exercise diplomacy in public statements. Punching above our weight causes offence and leads to marginalisation of Pakistan.”
It also stressed for an agriculture emergency to focus first on addressing the immediate issue of availability and inflation and second on the fundamental flaws within the agriculture value-chain, which if not addressed, could, in the worst case, threaten food security, but if dealt diligently could truly transform Pakistan into the granary of the Middle East and China.
The PBC also stressed for immediate steps to ease the burden of inflation and availability as well as actions on loss-making SOE (State Owned Enterprise), while calling for reforms in NAB (National Accountability Bureau) law as well as civil services.