Speakers underscore need for abolishing distinction between filer and non-filer

ISLAMABAD: The speakers at the Pakistan Institute of Development Economics (PIDE) conference on Sunday said that the distinction between a filer and a non-filer must be abolished in order to execute the fiscal policy.

The Pakistan Institute of Development Economics (PIDE) Macro Policy Lab recently hosted the “Fixing Fiscal Policy” Round Table Conference in Islamabad.

The event addressed the persistent challenge of fiscal indiscipline in Pakistan and sought to chart a visionary path for the nation’s fiscal policy.

In his introductory remarks, Dr. Nasir Iqbal, Associate Prof. and Chief of Macro-Policy Lab, PIDE said that the Round Table Conference, “Fixing Fiscal Policy,” aims to unite policymakers and thought leaders to foster collaboration and develop local solutions in the fiscal framework of Pakistan.

In his opening remarks speaking at the occasion Dr. Nadeem ul Haque, VC PIDE said that three things need to be focused on for the fixation of fiscal policy.

Firstly, the role of the government is crucial in ensuring effective fiscal management. Secondly, taxation and expenditure must be carried out in a transparent manner with accountability. This includes how to collect taxes, how to spend them, and where to allocate funds.

Lastly, debt management is also an important aspect that requires attention. Dr. Ashfaque Hasan Khan, Principal of the School of Social Sciences and Humanities, NUST while speaking at the roundtable meeting said that to address economic challenges, it is important to immediately reset the role of the government from being an active player to a facilitator.

He said this would involve eliminating the current regulation-based regime and transitioning towards a rule-based economy. The use of a regulatory guillotine would help in the elimination of unnecessary No Objection Certificates (NOCs), he said.

A rule-based approach, coupled with monitoring and evaluation, would ensure a more efficient and effective economic system. Distinguished participants included senior economists, researchers, and fiscal experts from various institutions across the country, such as the Ministry of Planning, Development and Special Initiatives, P&D Balochistan, QAU, SZABIST, the US Embassy, ADTMA, P&D Punjab, IIUI, NUST, and COMSATS.

The speakers said that overall, the federal government relies heavily on indirect taxes, resulting in overwhelming collective revenues. The tax mix is not ideal, and there is a need to reconsider functional assignments and the experience of GST on services. The provincial tax efforts also contribute to this burden on the economy.

Indirect taxes, such as customs, federal excise tax, and sales tax, outweigh direct taxes, creating distortions and discriminatory resource allocation. The effective tax to GDP ratio, which considers compliance cost, scrapping non-economic taxes, and tax expenditure cost, is calculated to be 14.23% for 2019.

To address these issues, it is recommended to upgrade both tax policy and authority. The focus is on “Doing Taxes Better” to achieve higher taxes and higher growth.