ISLAMABAD, JAN 29: Sardar Yasir Ilyas Khan, President, Islamabad Chamber of Commerce & Industry has called upon the government to take new policy measures aimed at promoting the documented economy that would help in improving the tax revenue collection and achieving sustainable growth. He said that the IMF has projected Pakistan’s GDP growth rate at 1.5 percent for the current fiscal year 2020-21, but this forecast was based on the formal economy, which was almost half of the total economy.
He said that according to various surveys and reports, the informal economy in Pakistan accounted for 35-50 percent of the total economy, therefore, the real GDP growth of the country could be enhanced significantly by bringing informal sectors in the formal economy. He said that IMF’s World Economic Outlook 2021 has projected the global economy to grow at 5.5 percent, emerging economies 8.3 percent, India 11.5 percent, China 8.1 percent, Malaysia 7 percent, Turkey 6 percent, France 5.5 percent, USA 5.1 percent, Mexico 4.3 percent. However, Pakistan’s growth projection was quite low than its actual potential and its main reason was that undocumented economy was not being considered.
Sardar Yasir Ilyas Khan said that if the government wanted to bring more people into the tax filing system, it should take confidence building measures for taxpayers. He said that lack of education about the tax system was holding back many potential taxpayers from coming into the tax system and urged that FBR should organize awareness sessions at chambers of commerce & industry in major cities to educate maximum traders about the benefits of tax filing. He said that FBR was withdrawing cash from bank accounts of the business community through scrutiny and it should stop this practice as it will promote trust deficit and encourage people to remain in the informal economy in order to save themselves from unnecessary troubles. He said that a friendly tax system would restore the confidence of taxpayers and bring more people into the tax system, therefore, the government should give top priority to developing a business friendly tax regime.
ICCI President Pakistan was confronted with many economic challenges including rising debt burden, fiscal deficit, low tax revenue collection and the best way to overcome these challenges was to focus on promoting documentation of the economy. He said that the government was under obligation to ensure that the benefits of development and other steps aimed at public welfare were judiciously and equitably accessible to all its citizens. However, this objective could not be achieved without getting rid of foreign loans and generating enough indigenous resources for which proper documentation of the economy and increasing the size of the formal economy was very important.
Fatma Azim Senior Vice President and Abdul Rehman Khan Vice President ICCI said that the construction package announced by the Prime Minister Imran Khan was a step in the right direction to bring hidden assets in the documented economy and encourage more businesses and investors to participate in the legal economy. He emphasized that the government should announce such packages for other sectors of the economy that would be helpful in promoting the documented economy and accelerating the pace of industrialization across the country.