New Delhi, Feb 24 Pakistan's economy is in dire straits as inequality and poverty are rising, while the Federal government is close to bankruptcy, according to an article in the Pakistani media.
The article in the Karachi-based Business Recorder pitches for export-led growth as the way ahead to uplift the masses by creating economic opportunities, along with a drastic overhaul of governance in public service delivery, especially in education.
It notes that political parties refuse to devolve power to the third tier of government, and there is little incentive to broaden taxation within municipal and provincial domains. Instead, the burden falls on the federal government, which taxes formal income heavily. At the same time, inefficiencies in the energy sector leading to high power bills are hitting the competitiveness of the country’s exporters, the article pointed out.
Tax collection on land is minimal—Punjab collects less in property-related taxes than a single major city in India. Agriculture income tax and sales tax on services remain far below potential, while manufacturing is burdened by high taxation and expensive energy, the article observed.
The federal government is close to bankruptcy and requires burden-sharing from the provinces. The tax base must be broadened by bringing all stakeholders into the net. Municipalities should be empowered to collect taxes and provide amenities to make cities more livable, the article stated.
At the same time, the federal government must reduce its footprint in the energy sector. The sector’s debt burden should be shared with the provinces. State-owned enterprises must be cleaned up and privatised, as has been attempted in the case of the national airline, PIA. The government must reduce its overall size. Greater fiscal prudence is especially needed at the provincial level, where new inductions into public employment are rampant. This trend must stop, the article observed.
The article blamed inconsistent government policies as major obstacles to investment, which have shrunk to an all-time low. Foreign direct investment has nearly dried up, and there is little sign of new local investment in export-oriented sectors.
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