ISLAMABAD: The Islamabad Chamber of Commerce and Industry (ICCI) has urged the government to take new policy measures aimed at promoting the documented economy that would help improve the tax revenue collection and achieving sustainable growth.
“The International Monetary Fund (IMF) has projected Pakistan’s GDP growth rate at 1.5 per cent for the current fiscal year 2020-21, but this forecast was based on the formal economy, which was almost half of the total economy,” said ICCI President Sardar Yasir Ilyas Khan.
He said that the informal economy in Pakistan accounted for 35-50pc of the total economy, therefore, the real GDP growth of the country could be enhanced significantly by bringing informal sectors in the formal economy.
On the other hand, he said, IMF’s World Economic Outlook 2021 has projected the global economy to grow at 5.5pc, emerging economies 8.3pc, India 11.5pc, China 8.1pc, Malaysia 7pc, Turkey 6pc, France 5.5pc, USA 5.1pc, Mexico 4.3pc. “Pakistan’s growth projection is quite low than its actual potential because the undocumented economy was not being considered”.
“Lack of education about the tax system also holds back many potential taxpayers from coming into the system,” he added, urging the Federal Board of Revenue (FBR) to organise awareness sessions at chambers of commerce and industry in major cities to educate maximum traders about the benefits of filing taxes.
The SCCI president lamented that FBR was withdrawing cash from bank accounts of the business community through scrutiny and urged the government to stop this practice, saying that it will create trust issues and force people to remain in the informal economy to avoid unnecessary troubles.
He emphasised that Pakistan was confronted with many economic challenges including, rising debt burden, fiscal deficit, low tax revenue collection, which is why the best way to overcome these challenges was to focus on promoting documentation of the economy.
He concluded by saying that the government is obligated to ensure that the benefits of development and other steps aimed at public welfare were equitably accessible to all citizens. However, this objective can not be achieved without getting rid of foreign loans and generating enough indigenous resources for which proper documentation of the economy and increasing the size of the formal economy was imperative.