Get your priorities right

LAHORE: The problems faced by the economy are enormous, and with current resources it will not be possible to resolve even half of them even if the government tries its best efforts. This is the time to set priorities right.

The state is facing revenue collection issues. Low revenue collection impedes resolution of almost all issues. By the look of it the state is still not serious in generating revenues according to its potential. This is the reason the IMF constantly dictates the government to levy taxes that could be easily collected.

It is easy to levy, for instance, additional one or two percent GST on all goods. The FBR will not have to make additional efforts in this regard. Increasing income tax rates is another easy solution, or, similarly, additional taxes on petroleum products will pose no problem.

But all these taxes are regressive in nature. Those already in the tax net or hapless consumers end up bearing the brunt of these taxes.

The IMF has given a revenue target for the whole year. It could be achieved through various corrosive measures. The alternative is to bring all tax evaders into the tax net. Blocking SIMs of non-filer is not a solution. When the FBR knows that certain SIM holders are not paying their taxes, it should directly confront them.

According to the FBR, there are over two million SIM owners that are evading taxes, and they are the ones who should have paid a substantial amount in taxes.

In the presence of technology, what is stopping the FBR to collect taxes by directly confronting them? Why was the process slowed by first blocking 500,000 SIMs, that too at 10,000 numbers per week? It will take 50 weeks or almost a year to block half a million SIMs. Two million will take four years.

Can we afford to allow tax evaders to remain undocumented for so long? It is simply an eyewash. The over 20,000 workers in the FBR hardly collects 5-10 per cent of the total tax revenue through its efforts. If only 5,000 or 25 per cent of this human resource is specifically assigned to bring 10 tax evaders per day into the tax net, it will add 1.25 million high-profile tax evaders into the tax net. There will be no need for levying corrosive taxes.

Or even if these taxes are levied, the additional taxes collected would spare at least Rs2 trillion for priority areas where funds are needed.

The priority areas should be quality education up to the secondary level; training of this human resource in relevant skills; enhancing the delivery and quality of health care facilities; providing free quality meals in primary schools; and allocating more funds for conditional cash transfers to the poor either on the basis of enrolment of girls in school or on condition of performing community work.

These areas have been neglected for long or given lip service as the government of Pakistan has always remained short of funds for social welfare services. We have the potential, and we must generate Rs2 trillion yearly for social welfare. FBR officials must either deliver or go home.

The fiscal deficit should be plugged by withdrawing all exemptions, immediately privatizing all loss-making public-sector companies and reducing government expenditure by at least 25 per cent and that of elected rulers by 50 per cent. This is not wishful thinking; this is doable and only needs committed leadership.