Experts highlighted the necessity of documenting the national economy and income to support a reformed taxation system aimed at broadening the tax base and regulating untaxed sectors. This approach involves comprehensive stakeholder involvement.
The Sustainable Development Policy Institute (SDPI), in collaboration with Revenue Mobilization, Investment and Trade (REMIT) and the UK’s International Development Agency, organized a Pre-Budget Consultative Workshop titled “Optimizing Revenue and Public Spending for Inclusive Growth” on Thursday.
During the workshop, Louie Dane, the Senior Economic Advisor and Team Lead at the Foreign, Commonwealth and Development Office (FCDO), addressed the attendees via videolink. Dane highlighted Pakistan’s status as home to one of the youngest populations and among the fastest-growing markets globally. He emphasized the country’s significant infrastructure and the potential for women to contribute to the economy. Dane stressed the importance of addressing economic bottlenecks and building capacities to combat climate change. He also noted the challenge of low incomes resulting from increased sales taxes and called for practical solutions and resources to ensure inclusive development through collaborative efforts from all industry stakeholders.
In his opening statements, Dr. Abid Qaiyum Suleri, Executive Director of SDPI, highlighted that the energy sector faces significant pressure due to COVID-19, conflicts, climate change, and the situation in Gaza. Governments worldwide are compelled to take more action. He emphasized the need for revenue mobilization without burdening existing taxpayers, which poses a significant challenge. Dr. Suleri noted that the European Union (EU) has introduced the Carbon Border Adjustment Mechanism (CBAM), requiring exporters to reduce carbon emissions across the supply chain, particularly for industries like steel, fertilizer, aluminum, cement, and copper.
Considering the implications of CBAM, Dr. Suleri suggested that if the EU and the US can implement such measures, then China and Pakistan should also prioritize environmentally friendly practices. Otherwise, the government may need to consider imposing taxes similar to those in the EU and US.
Kamran Saeed, Member Budget of the Lahore Chamber of Commerce and Industry (LCCI), proposed granting amnesty for undeclared foreign assets to enhance market liquidity. He also recommended rationalizing fines, funds, and penalties, addressing pending refund issues, reducing the frequency of audits, and imposing penalties for non-filing. Saeed advocated for decreasing withholding tax and advance income tax, as well as reducing the minimum tax rate on turnover and eliminating import duties on imported raw materials.
Mubasher Naseer Butt, Chairman of the Garments Industry Association, emphasized that resistance to tax system reform is a significant obstacle that needs resolution. He suggested that expanding the tax base is not achievable by integrating small retailers but rather by holding untaxed entities accountable.
