Seminar on budget 2011-12: call for broadening tax base to steer country out of crisis

Speakers at a seminar on "Forthcoming budget 2011-12: opportunities and challenges" called for widening the existing base to steer the country out of the prevailing financial crisis. The seminar was organised by Sustainable Development Policy Institute (SDPI) in collaboration with Actionaid Pak (Aapk) here on Monday.
Leading experts and economists including former chief economist Planning Commission, Dr Tahir Pervez, former principal economic advisor, Ministry of Finance, Sakib Sheerani, Head department of economics NUST, Dr Athar Masood, Executive Director, Center for Peace and Development Initiative (CPDI), Mukhtar Ahmed Ali, Dr Syed Nazre Hyder, senior economic advisor Actionaid Pakistan (AAPk) and office-bearer of Income tax bar association, Hafiz M. Idress spoke on the occasion.
They noted that country was facing financial crunch because the resources were not being used properly. They said that if the tax base is widened than there are sufficient chances that country could overcome the financial crisis. Senior economic advisor AAPk said policymakers have only few options to pull the economy out of the quagmire, adding the country had never before experienced such a grave economic situation. He informed that the fiscal deficit was much higher than its target, revenue collection was not only short of target but lowest as compared to tax-GDP ratio of other developing countries, heavy subsidies to public sector enterprises, heavy debt payments, inflation, unanticipated expenditures on rehabilitation of displaced persons, and rehabilitation and reconstruction of unprecedented floods-affected areas have been some of the key challenges.
Despite the worst economic situation, the data regarding current account balance and exports receipts seemed satisfactory, he added. Dr Pervez Tahir recommended widening of tax regime instead of focusing more on current approach of reinforcing rigorous taxation on existing taxpayers.
Sakib Sherani said that there was no shortage of resources but the key challenge was efficient use of available resources, which is not happening due to bad governance and unnecessary expenditures. He said over 700 billion rupees can be collected through widening of tax base, 330 billion rupees can be saved by plugging leakages and irregularities in public sector expenditures.
"We have no fiscal constraints but we have institutional and governance crisis," he added. Executive Director CPDI, Mukhtar Ahmed Ali, said a meager portion of budget is allocated for education sector. He added the quality of education could not be improved as 95 per cent of the budget is allocated for salaries and only 5 per cent is spent on entire education sector. He lamented over missing focus on gender disparity in education and added that out of 42 new colleges and institutions built in 2008-09, only eight were for women.
Dr Athar Masood said that currently country's economy was in state of stagflation involving increased inflation with stagnant growth. "Our real concern should be to sort out combination of policies for coming out of this crisis. We need to turn our attention towards bleeding public sector enterprises and on revenue generation," he added.
While highlighting the inefficiency of FBR, Hafiz Idress suggested broadening of tax base. He proposed that National Tax Number (NTN) should be made compulsory for every transaction, sale, purchase, transfer and gifts. He demanded that the agriculture sector should also be taxed.