LAHORE: The Lahore Chamber of Commerce & Industry has called for a new and sustainable methodology to defeat the challenge of budget deficit instead of depending on conventional ways like huge borrowing or burdening the existing taxpayers.
In a statement issued here, the LCCI President Abdul Basit, Senior Vice President Amjad Ali Jawa and Vice President Muhammad Nasir Hameed Khan said that budget deficit is one of the major economic indicators and unfortunately, country’s budget deficit always shown a discouraging image. They said that for ever and a day governments chosen an easy way of borrowing and burdening the existing taxpayers to bridge the gap between spending and revenues. Resultantly government is allocating a major part of the budget for debt servicing.
“Pakistan recorded a budget deficit equal to 4.90 percent of the country’s GDP in 2016. Government Budget in Pakistan averaged 1.84 percent of GDP from 1990 until 2016, reaching an all time high of 8.80 percent of GDP in 1990 and a record low of -8.80 percent of GDP in 2012”, they added.
The LCCI office-bearers urged the government to cut its non development and administrative expenditures to reduce fiscal deficit. They said that administrative expenditure for running the government affairs is a major part of non development expenditure that must be controlled. They said that government’s grants are also another reason of public expenditure. They said that governments used to give grants to different provincial governments and welfare organizations. Likewise, they said, debt servicing is also a major non development expenditure that is hindering the economic growth badly. They said that there is a dire need to cut these non development and non productive expenditures.
They said that revenue increase would certainly help reduce the budget deficit but for this purpose government would have to expand tax net instead of burdening the existing taxpayers as being witnessed since long. They said that increase in number of taxpayers would lead to economic growth but concerned departments have failed to bring new taxpayers into the tax net. They said that during last three years, tax collection has increased about 60% whereas number of persons who filed tax returns has almost decreased by 0.2 million. It simply reflects that FBR could not succeed in broadening the tax net resulting in squeezing existing tax payers. They said that revenue collection through indirect taxes is almost 62% of total tax collection which cannot be encouraged. Pakistan lacks culture of tax compliance due to unfair taxation system. Harmful taxation that hinders business and trade in the country should be eliminated. We firmly believe that broad based reforms in taxation system with the consultation of private sector are need of the hour.
The LCCI office-bearers said that to reduce fiscal deficit, government would have to use a combination of policies as methods like huge borrowing and burdening the existing taxpayers have created various challenges for the economy. While citing the example, they said that government has allocated huge amount of Rs. 1401 billion for debt servicing that was enough to build state-of-the-art hospitals, schools, colleges, universities and to build major roads. They said that this is the time to reduce fiscal trade deficit to reap full fruit of positive economic indicators and mega projects of China Pakistan Economic Corridor (CPEC).
