Great Debate’ on Geo News Experts suggest urgent steps to revive Pakistan’s economy

KARACHI: Financial experts and top businesspeople of the country have laid emphasis on plugging leakages, broadening the tax base, increasing tax-to-GDP ratio and digitalisation among other measures to stabilise and boost the country’s economy.

Taking part in the Geo News live broadcast ‘Great Debate’, they regretted that the economic indicators paint a bleak picture of the country’s economy amid plethora of challenges, including sky-high inflation, depleting foreign exchange reserves, stagnant exports among others, while the government continues to make promises of stabilising the economy.

Senior journalist and analyst Shahzeb Khanzada hosted the debate live on Geo News.

Lucky Cement Chief Executive Officer (CEO) Muhammad Ali Tabba, Chairman of Banks Association Zafar Masud, Chairman of Arif Habib Group Arif Habib, President and CEO of Habib Bank Limited Nassir Salim, economist Syed Ali Hasnain, Managing Director Systems Limited and CEO Asif Peer, Director of Gul Ahmed Textiles Ziad Bashir and Topline Securities CEO Muhammad Sohail participated in the programme.

Expressing his views during the debate, Chairman of Banks Association Zafar Masud highlighted Rs3.5 trillion leakages in the tax collection. He suggested that subsidies will have to be eliminated.

Systems Limited CEO Asif Peer said increase in employment was a source of hike in tax revenue. “Provision of employment opportunities will increase income because the salaried class pays the most taxes,” he added.

Gul Ahmed Textiles Director Ziad Bashir said industries had been burdened. “Retailers’ share in the GDP is 17 per cent but only 1pc in tax,” he said.

Economist Ali Hasnain was of the view that it wasn’t the country which was poor but the government. “Today, 80pc lending from the banks is going to the government,” he said, adding the private sector did not have the capability of taking loans.

Topline Securities CEO Mohammad Sohail said there were leakages in industries’ taxes. “Global organisations are also saying that Pakistan’s tax-to-GDP ratio is low,” he said.

Sohail also suggested that jacking up tax by Rs3,000 billion to Rs4,000 billion was not difficult.

Lucky Cement CEO Muhammad Ali Tabba said Pakistan’s tax-to-GDP ratio was 9pc, but other countries in the region had 15pc to 18pc.

Arif Habib said super tax was imposed on people who were already paying taxes. He said he suggested to the prime minister to cut down the super tax by half. “There are leakages of Rs20 billion in the steel sector alone,” he added.

The Arif Habib Group chairman said Pakistan had the highest energy cost, interest rate and tax rates in the entire region. “Who will invest in such a situation?” he asked.

Chairman of Banks Association Zafar Masud said the criticism that the “banks don’t focus much on the private sector” was right. He said that taxes had been imposed on the real estate, agriculture and retail sectors but collection was not done. “95pc of fiscal deficit is funded by the banks,” he said, adding that the dollar rate came down after the government established its writ. “No protest will be staged if the government wants to tax traders,” he added.

Asif Peer said that our vision of digitisation is declining. He said that tax collection will be easy when the supply chain is digitised. At this, Ziad Bashir said that tax imposition should not be delayed amid fear of protests.

Ali Hasnain said discussion on imposing taxes was not new and added that taxation is most regressive in Pakistan. Mohammad Sohail said the government had the data regarding non-taxpayers but the problem was about implementation. “Rs3,000 billion to Rs4,000-billion tax can be collected through the use of force,” he suggested.

Arif Habib suggested that there shouldn’t be a wealth tax in Pakistan or the people will move abroad. He said that taxes cannot be collected by increasing the tax rate. Instead, economic activity will have to be increased, he added. Tabba argued that industries were being given expensive electricity and gas. “How would the industries earn if they are already incurring losses?” he questioned. “The industries are shrinking due to expensive electricity, gas and high taxes,” he said, while suggesting to cut down taxes and focus on those who abstain from paying taxes.

Saleem said the country would have to limit reliance on cash economy and make solid measures towards the achievement of digital Pakistan.

Meanwhile, Peer suggested use of technology for cutting down expenses. He said skilled people from the information technology (IT) sector are moving abroad. “Technology needs to be focused on if we want to come out of the subsidy culture,” he said.

Arif Habib said the issues can be fixed very quickly as there was a lot of room for reforms. He said that privatisation has been most successful in Pakistan.

Masud said the regulators of companies which have to be privatised need to be strong. There was no regulator in the aviation sector, he added. He suggested that first regulators should be brought in the sectors which don’t have regulators and then privatisation should be done. Bashir suggested that local investment should be priortised for privatisation.