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LAHORE: The pace of socio-economic development in Pakistan can be improved by reducing the loss of the national exchequer by curbing illicit trade, said a report of international research institute Ipsos. Pakistan’s ranking in the Human Development Index of the United Nations Development Programme (UNDP) has dropped from 152 to 154 in 2015 compared to 189 countries.

The report highlighted that a significant investment can be made in providing basic services to the people and building infrastructure while minimizing the damage done to the national exchequer by illicit trade. According to the report, tax evasion of Rs 310 billion is taking place annually in five sectors in Pakistan. These sectors include the illicit trade in tires and lubricants, cigarettes, real estate, and tea.

Illegal trade of tires and lubricants contributes Rs 90 billion annually to the national exchequer, Rs 80 billion annually from illegal sale of cigarettes, Rs 60 billion from tax evasion in real estate, Rs 45 billion annually from the illegal sale of medicines and illegal sale of tea. The national exchequer is facing an annual deficit of Rs 35 billion.

According to experts, Pakistan can strengthen its position in the Human Development Index by improving public health, education, clean drinking water, and infrastructure by preventing tax evasion worth billions of rupees annually through illicit trade.

The huge evaded amount of Rs 310 billion from five sectors is 80 percent of the development budget for the financial year 2020-21. By saving this amount, Pakistan can quadruple its education budget, as well as increase the size of the government’s social welfare program “Ehsas” by 60 percent.

According to the report, by stopping tax evasion of only five sectors, by installing 391 water filter plants in each of the 400 tehsils of Pakistan, clean drinking water can be provided to 80 percent of the population of the country. By stopping tax evasion in five sectors, 625 km of motorways can be built in Pakistan every year or 67,000 homeless people can be provided houses every year.

According to experts, increasing the resources of the government to provide relief to the people from inflation is the biggest challenge. On the other hand, the rapidly increasing debt burden is also adding to the difficulties. To deal with this situation, it is necessary for the government to increase its financial resources. The government can increase resources for social development in the short term through the effective implementation of technology-based solutions and laws to enhance the capacity of the FBR.

Copyright Business Recorder, 2022

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