This is apropos a Business Recorder op-ed “Broadening the tax net: A solution to taxation woes?” carried by the newspaper recently. The writer deserves commendations for presenting a highly informed perspective on the subject.
Dr Muhammad Iqbal, the writer, has argued, among other things, that “Pakistan being a chronically resource constrained country with a tax-to-GDP ratio that is pathetic even in comparison with similarly placed countries, should be focusing on improving its revenue performance by adopting tailor-made policies rather than following donor-driven strategies that may have worked in entirely different environments or making efforts to appease the powerful lobbies who are not themselves paying their due taxes.”
Currently, Pakistan is an International Monetary Programme (IMF) and therefore subject to latter’s conditionalities or stipulations in all areas of economy, including revenue generation. In this regard, I would like to raise a point that although the IMF itself concedes the fact that developing countries face formidable challenges when they attempt to establish efficient tax systems, it still sets prohibitively tough conditions for the borrowers in negation of its own understanding and appreciation of the economies of developing nations.
Pakistan is one of the countries where marginal changes are often preferred over major structural changes.
Therefore, structural reforms continue to elude our country owing to a variety of reasons. The country desperately needs structural reforms to ensure a positive change in the entire fabric of economy and institutional and regulatory frameworks.
The present caretaker setup can take a meaningful step in this regard: it must set in motion a process that ultimately finds more strength and legitimacy under the rule of a government that emerges through the upcoming general election.
I must say that this won’t be a mean effort on the part of an interim setup as it would always be remembered as a major contribution to policymaking. The fact that the country needs structural reforms without any further loss of time cannot be overemphasized, so to speak.
Haroon Pasha (Lahore)
Copyright Business Recorder, 2023