KARACHI (September-09-2024) The Chairman of the FPCCI Advisory Board and National Business Group Pakistan, the President of Pakistan Businessmen and Intellectuals Forum and All Karachi Industrial Alliance, and former provincial minister Mian Zahid Hussain said on Monday that revenue has decreased substantially due to the slowdown in the economy and the decrease in imports.
He said the government would have to bring a mini-budget to bridge the shortfall and please the IMF.
Mian Zahid Hussain said that the mini-budget will further affect the economy and increase people’s suffering.
Talking to the business community, the veteran business leader said that instead of introducing a mini-budget, the situation can be improved if electricity prices are reduced by 9 cents for industries and the markup is slashed by four percent.
The business leader said that the decision to increase taxes was made due to the IMF’s pressure when the country’s economic condition was relatively weak, further worsening the situation.
Also, imports have been reduced due to economic slowdown, a significant income source. The recent three-and-a-half percent reduction in interest rates has given modest relief to the business community. Still, he observed that a further decrease of four percent is necessary.
He said that by bringing electricity prices to nine cents, Pakistan’s exports are expected to increase by six billion dollars immediately, increasing Pakistan’s foreign exchange reserves, improving Pakistan’s debt repayment capacity, and boosting its credit rating.
Mian Zahid Hussain said that increasing exports by six billion dollars will improve the country’s employment situation and relieve the people. He said more business and an expanded tax base are required to increase revenue.
He said that past experiences show that instead of bringing new taxpayers into the system, the tax burden will be increased on the existing taxpayers. A proposal to increase the withholding tax by one percent from October 1 is under consideration, which is unlikely to benefit any stakeholder.
He said that due to the existing policy of increasing the burden on taxpayers, the size of the documented economy is decreasing while the size of the undocumented economy is continuously growing.
If this situation continues, the documented economy will shrink further. A large part of the economy is undocumented, and traders and landlords are unwilling to pay taxes, leaving taxpayers at the mercy of tax collectors.
Mian Zahid Hussain said that the IMF board still needs to approve the loan for Pakistan, which is making the market nervous. It is widely believed that this will affect the value of the rupee, so steps should be taken to prevent the expected slide.
Despite the IMF’s cold attitude, the government must meet its tax targets anyway. The best solution to this situation is to increase exports and direct taxes. Still, retailers are not inclined to pay taxes, so people experiencing poverty suffer from inflation, and the economy is shrinking.
Mian Zahid Hussain further said that the current situation is also very harmful to businesses because refunds are stopped in case of a reduction in tax collection, which affects industrial activities.
He warned that boosting exports and expanding the direct tax base will improve the situation; otherwise, the problem may worsen.
