The blueprint

This refers to the article ‘Fixing the taxation system’ (December 23, 2022) by Dr Ishrat Husain. Pakistan has long been facing the twin challenges of the budget deficit and current account deficit. The problem is not insurmountable, given that there is a will to implement certain policies. When it comes to the budget deficit, we must rethink the NFC Award. The provinces should be made to raise more revenue on their own and not just put the tab on the federal government. Furthermore, we must broaden the tax net. Agricultural income, which is currently tax free, has to be brought into the tax net.

Coming to the current account deficit, it would be prudent to restrict the import of luxury items and raise the tariffs on imported items in general. This would facilitate local producers and exporters, allowing us to strengthen our industrial base while reducing our dependence on foreign aid and loans for forex. In addition, we need to increase the tax and other incentives for export-related sectors and firms and crack down on illicit activities like currency smuggling, which unfairly devalue our currency. These reforms will require determined and bold leadership, in order to overcome the vested interests that seek to perpetuate the status-quo. It is a formula that this country has struggled to find and one which it desperately needs.

Arif Majeed

Karachi