Broadening tax base: government urged to take tough decisions in budget

Dr Ishrat Hussain, former Governor State Bank of Pakistan (SBP), has said the government should take tough decisions to broaden tax base in the country. "Every income should be brought under tax net to generate more revenues for the country in the upcoming budget," he said while speaking at the opening ceremony of Dawood Capital Management (DCM) new head office here on Monday.
Dr Hussain said that the tax-to-GDP ratio was very low in Pakistan, as a number of people were not paying taxes despite earning huge incomes. He pointed out that the national saving ratio was very low. "It is needed to increase national saving ratio in the country," he suggested. "The increased national saving ratio would help minimise country's dependence on foreign donor agencies," he said adding that the country would be able to depend on its own resources for development projects.
He was of the view that education, health, energy and infrastructure projects should be given top priority in the development schemes. He also talked about the importance of the mutual fund industry and NBFC sector to the economy of Pakistan. He also underlined the importance of SMEs and ways in which Securities & Exchange Commission of Pakistan (SECP) and State Bank of Pakistan (SBP) could work together.
Dr Hussain said that the high rate on National Savings Schemes was not only hindering the growth of the mutual fund industry but also crowding out the private sector. He suggested that the government should control its borrowing and bring the rates on NSS down. In India, he said, the average bank deposit rate is 7.5 percent and the average return on government savings schemes is 8 percent per annum. In Pakistan, he compared, the average bank deposit rate is 6 percent per annum and the average return on NSS is around 13 percent per annum, he said.
Tara Uzra Dawood, CEO of Dawood Capital Management welcomed the guests and briefed them about the company's performance and the overall mutual fund industry. Dawood Capital Management Limited is a leading asset management company based in Pakistan. It is also listed on the Karachi Stock Exchange. Founded in 2003, DCM has 3 funds under management as well as an investment advisory services license. Dawood Money Market Fund, its flagship fund, is the top performing income fund in Pakistan, with FY 2010-2011 annualised returns to date of well over 25 percent.