LAHORE: Former federal finance minister Dr. Hafiz A. Pasha has said that huge taxes, around 60 percent of the total collection, on large-scale manufacturing sector is affecting exports.
He was talking to business community here at Lahore Chamber of Commerce and Industry (LCCI) where the LCCI President Faheemur Rehman Saigol, Senior Vice President Tanveer Ahmed Sheikh, Vice President Khurram Lodhi, EC member Firdous Nasar, former EC member Mian Muhammad Nawaz were also present.
Dr. Pasha noted that Pakistan has several sectors with high income potential, such as agriculture, yet the tax revenue from these sectors remains minimal. Only one percent of landowners possess 22 percent of the best agricultural land but the revenue collected from the agriculture sector is negligible, citing that tax revenues of just Rs 4 billion have been estimated from this sector which is very low compared to Rs 4,500 billion from the manufacturing sector.
He added that today, investment in the large-scale manufacturing sector is much lower than it was 25 years ago. The biggest concern is that the depreciating capital stock is not being replenished, which hampers the sustainable growth of the sector.
LCCI President Faheemur Rehman Saigol said that economic potential has not been utilized properly. China and India followed the economic model of the 1960s and achieved growth, while Pakistan fell behind.
He highlighted that the country has yet to establish SME zone, while developed countries have relied on SMEs as the backbone of their growth. Every year, millions of young graduates enter the market but remain unemployed. Providing them with skills and sending them abroad could significantly increase remittances, he suggested.
Dr. Pasha said that export sector and large-scale manufacturing are the backbone of Pakistan’s economy, whereas real estate – a non-productive sector – continues to attract the highest investment. He added that revenue collection from property is just 0.2 percent, twelve times lower than that from the industrial sector.
He said that Pakistan currently has 2.1 million unemployed youth, 2.6 million children out of school, and 22 percent of the workforce without employment. Additionally, only six percent of bank credit is available for three million small units, while the 80 percent is provided to the public sector by banks.
