The Lahore Chamber of Commerce and Industry (LCCI) on Thursday called for a novel and sustainable methodology to overcome the challenge of budget deficit instead of depending on usual ways.
LCCI President Abdul Basit, Senior Vice President Amjad Ali Jawa and Vice President Muhammad Nasir Hameed Khan said, “Budget deficit is one of the major economic indicators and unfortunately, country’s budget deficit always shown a discouraging image.”
“Forever and a day governments chose an easy way of borrowing and burdening the existing taxpayers to bridge the gap between spending and revenues. Resultantly government is allocating a major part of the budget for debt servicing.”
“Pakistan recorded a budget deficit equal to 4.90 percent of the country's Gross Domestic Product (GDP) in 2016. Government Budget in Pakistan averaged 1.84 percent of GDP from 1990 until 2016, reaching an all time high of 8.80 percent of GDP in 1990 and a record low of -8.80 percent of GDP in 2012,”
The Chamber stated, “Administrative expenditure for running the government affairs is a major part of non development expenditure that must be controlled.”
“The government’s grants are also another reason of public expenditure. Governments used to give grants to different provincial governments and welfare organizations. Likewise, they said, debt servicing is also a major non development expenditure that is hindering the economic growth badly. There is a dire need to cut these non development and non productive expenditures.”
“Revenue increase would certainly help reduce the budget deficit but for this purpose government would have to expand tax net instead of burdening the existing taxpayers as being witnessed since long. Increase in number of taxpayers would lead to economic growth but concerned departments have failed to bring new taxpayers into the tax net.”
“During last three years, tax collection has increased about 60 percent whereas number of persons who filed tax returns has almost decreased by 0.2 million. It simply reflects that Federal Board of Revenue (FBR) could not succeed in broadening the tax net resulting in squeezing existing tax payers.”
“Revenue collection through indirect taxes is almost 62 percent of total tax collection which cannot be encouraged. Pakistan lacks culture of tax compliance due to unfair taxation system. Harmful taxation that hinders business and trade in the country should be eliminated.”
“We firmly believe that broad based reforms in taxation system with the consultation of private sector are need of the hour,” they added.
The LCCI office-bearers said, “To reduce fiscal deficit, government would have to use a combination of policies as methods like huge borrowing and burdening the existing taxpayers have created various challenges for the economy.”
While citing the current measures taken by the Government, they said, “The government has allocated huge amount of Rs. 1401 billion for debt servicing that was enough to build state-of-the-art hospitals, schools, colleges, universities and to build major roads. This is the time to reduce fiscal trade deficit to reap full fruit of positive economic indicators and mega projects of China Pakistan Economic Corridor (CPEC).