It is too early to claim that economic turnaround has started, but the appreciation of Pakistani rupee is certainly a big step towards revival as it will address inflation, petroleum product rates and the energy cost.
Some pundits expect the dollar to depreciate to Rs180. Rupee appreciated by Rs8 in the morning session in the interbank market to add to Rs10 gain it achieved on Wednesday.
We must understand that Pakistan’s economy was not in good shape even when the dollar was traded at Rs180. We were in a coma then as well as now.
Still a decline of Rs60 from the peak of Rs240 against the greenback would be a great achievement. It will address price hikes and bring back the confidence of the investors.
It is in our nature to expect the moon on any improvement in the economy. Our insecure governments also tend to shower the electorates with subsidies and concessions even from the slightly improved economic credentials.
Face that the state expenses are much higher than the available resources are ignored. Lack of economic sustainability is also disregarded.
Governments are frightened of vested interests and do not take measures to remove distortion in the economy. They introduce half-cooked reforms and even those reforms are further diluted or withdrawn on slightest protests by the influential segments of the society.
With this attitude, we cannot dream of attaining sustainable growth. Protests from the poor do not matter, but when influential segments are hit every government that is in power rolls back its reforms agenda.
Take for instance the case of the power tariff that has been tripled in the last four years, the poor consumers made only muted protests. But when the government announced recovery of taxes from non-compliant traders through electricity bills, the protests forced the government to dilute the measure.
The state has always failed to create awareness among the masses as far as the traders are concerned. Most pay no tax at all (not even the nominal turnover tax without any documentation).
The first option that the government gives to traders is to file proper tax returns duly supported by purchase and sales receipts. The other alternative is to pay a fix tax of Rs3,000-10,000 per month depending on the location of the shop and its size.
To document, they are asked to install point of sales machines connected with the federal board of revenue server at their outlets. None of these options are acceptable to them. And the government has agreed to show leniency in this regard.
State functionaries must realise that the salvation of our country lies in collecting revenues fairly and transparently from all earners be it traders, transporters, doctors, engineers, or any businessmen. Various studies have shown that the tax potential of our country is higher than the current expenditures (which are unreasonably high). Unfortunately, we collect 40 percent of the potential tax and depend on loans to manage our day-to-day affairs.
We must exploit every avenue of revenue collection after suffering so much humiliation from the donor agencies and the friendly countries. We must restore our national dignity. There should be no free lunch until we achieve self-sufficiency. Tax dodgers deserve no concession or leniency.
The writer is a staff member