Founder and President of the Islamabad Women’s Chamber of Commerce and Industry (IWCCI), Samina Fazil has said that Pakistan’s future appears to be dismal if significant improvements to the country’s tax policy are not implemented. Addressing the business community here on Tuesday, she said that the harmful impacts of inflation and the sharp increase in energy prices can be ascribed to the failure of a large number of small and medium-sized businesses.
Samina Fazil said that there was possibility of increase in inflation as a result of the allowing sugar exports; therefore, she urged that this practice be prohibited.
She said that Pakistan could not continue to exist with the current tax system, dismally low revenue and irresponsible spending which results in continued borrowing. Therefore, the county needs short-term and long-term tax policy reforms while taxes on non-essential and luxury items should be increased.
The IWCCI President said that the government must make tough decisions to fix economic problems and implement recommendations of lenders to come out of the current economic mess. However, she regretted that so far, the elite have been spared from the impact of the IMF wish list, and the whole burden has been placed on the masses, who are reeling under unprecedented inflation and unemployment.
Critical flaws within Pakistan’s tax system have caused an estimated loss of Rs567 billion during the last seven years in only one sector, which politicians dominate. Lashing out on the energy policy, the business leader said that Pakistan has one of the world’s lowest per capita electricity consumption and the lowest outside of Sub-Saharan Africa. Pakistan is plunging further into the energy poverty zone due to the wrong policy of increasing energy prices very frequently.
Despite rising urbanisation, the average consumption per electricity connection in Pakistan sits at a 20-year low, which is a real threat to prosperity. Pakistan’s per capita income is dwindling, and unemployment is rising. Still, the effective electricity tariff for use beyond 300 units is now comparable to the USA, already higher than the UAE, and inching closer to Singapore, which is unacceptable, she said.
Samina Fazil said the country can only develop with the unending practice of so-called energy tariff rationalisation. She said that despite increasing tariffs, many DISCOS are involved in overbilling to the tune of billions of rupees, which should be stopped. She said a larger, medium-term IMF bailout, with complementary financial support from friendly countries, is imperative to address its balance-of-payments troubles. The key to unlocking fresh IMF funds is convincing the lender that Pakistan is ready to undertake real reforms.