All Pakistan Business Forum (APBF) Patron-in-Chief and Pakistan Freedom Movement Chairman Haroon Khawaja on Tuesday said that the real task of the government was to eliminate parallel economy, which was equal to the documented economy of around $315 billion, and the policy focus should be more on doubling the size of documented economy to over $1 trillion. “It is not possible through temporary amnesty schemes, rather it can be done through reforms in bureaucracy, especially in the Federal Board of Revenue (FBR), replacing it with an independent institution, setting it free from any influence of the government and political victimisation, that can effectively enforce tax laws and strictly deal with smuggling, custom duty evasion and black money with zero tolerance,” he said during an interaction session with the APBF National Board on the topic of ‘Current economic challenges and its way out & solutions’. The interaction session was held at the Iftar reception, which was also attended by APBF Chairman Ibrahim Qureshi, President Syed Maaz Mahmood and General Secretary Khurram Niaz. Haroon Khawaja called for undertaking structural reforms in bureaucracy to make it efficient and responsive to the needs of time, as just good policies had little impact unless the institutions implementing them were effective and efficient. He said the civil services system did not adapt to the changed circumstances, remaining frozen and unresponsive to the people’s needs and aspirations. He said that the bureaucratic set-up in Pakistan was an extension of the legacy of the Indian Civil Service, whose guiding principle was domination or exercise of authority and not service or performance of duty. Replying to a query, the APBF leader, who is also a distinguished economist, observed that Pakistan’s narrow revenue base was fast becoming a monumental challenge, as all successive governments had failed to increase both tax and non-tax revenue. “As a result, the economy continues to suffer on all fronts.” On one side, there was an internal problem of enhancing revenues that was struggling to be in double digits in terms of tax-to-GDP ratio, he said. He said the foreign direct investment (FDI) could face new problems if issues relating to terror financing and money laundering were not tackled properly. The noted financial expert said that there was a distinct co-integration relationship between fiscal deficit and economic growth, in which fiscal deficit had harmful effects on economic growth. He said amnesty schemes never worked in the past, and without plugging the loopholes, black economy would continue to appear, and the future government would continue bringing more such amnesty schemes. He stated that Prime Minister Imran Khan had been talking about reforming national institutions but sadly those in his team did not appear prepared for the promised reforms. “Resultantly, no change has been brought about in the bureaucratic structure of Pakistan so far.” He said the government had set revenue target of Rs 5.5 trillion in the forthcoming budget, which seemed unrealistic, keeping in view the ground realities. He urged the government to set realistic tax target in next budget, which could be achieved and proved beneficial for the economy. He said that tax target of Rs 4.39 trillion was set for fiscal year 2018-19, but during the first 11 months, the FBR managed to collect only Rs 3.30 trillion, showing a shortfall of around Rs 448 billion. Quoting the FBR chairman, he said that Shabbar Zaidi himself had admitted that current poor and flawed taxation system posed threats to the economy, as it was the main cause of accumulation of untaxed wealth in the country. He said the prevailing tax system was heavily relying on indirect taxes that put more burden on businesses and the common man. Replying to a query, the APBF leader observed that despite devaluation of Pakistani rupee and government incentives to export sector, the country’s sale of goods to outside world declined by 11.13 percent in March 2019 to $1.97 billion. He said that though Pakistani rupee has devalued by more than one-third since December 2017, neither exports had shown a sizable growth nor imports had been contained. Talking about the recently announced amnesty scheme, he observed that it was an incentive package for tax evaders. He recalled that the previous government had given five amnesty schemes, and added that the 6th amnesty scheme would not be able to address the issue of revenue shortfall, as there was nothing new in the scheme. He said the government had increased the prices of petroleum products by up to 21.32 percent in the last four months despite the fact that world crude oil rates were declining. Speaking on the occasion, Ibrahim Qureshi stressed the need for introducing reforms in the tax department, and purchase new equipment, besides implementing unique methods to enhance the tax net. The chairman concluded that instead of depending on foreign aid or loans, the government had to accelerate economic activities and enhance industrial production, finding new destinations for Pakistani merchandise as heavy debts had already hollowed the foundations of the country. APBF President Syed Maaz Mahmood, addressing the meeting, recommended broadening the tax base through appropriate legislation to ensure that all income earners paid taxes equitably, including on agriculture income. He said that the challenge was not just to restart the process of industrialisation in the country but to redraw the future industrial map in a way that placed reliance on home-grown industrial solutions in a competitive manner; encouraged exports and promoted the SMEs, which he said were the “real engine of growth and employment generation”.