ISLAMABAD-The Pakistan Industrial and Traders Associations Front (PIAF) has said the real answer to country’s problems lies in the structural reforms, as there are a number of inefficiencies in tax collection, which must be removed. In a statement, the PIAF Chairman Faheemur Rehman Saigol observed that the tax compliance should be improved and tax base should be enhanced, which cannot be achieved with a single policy change, but through a systemic approach. He said that business­es are already in a complicated state-of-affairs, while anti-busi­ness actions against business community will not only add to the miseries of the business community but also promote trust deficit between the gov­ernment and the business com­munity. He said that in the past instead of focusing on control­ling under-invoicing, curbing smuggling and expanding the tax net, the FBR seems to be in­clined to pressurise registered taxpayers, who are already suf­fering due to a high rate of sales tax, income tax, and custom du­ties by creating fictitious cases for recovery of outstanding dues to meet revenue target.

The PIAF chairman also called for building a structure in the country, which is in ac­cordance with the require­ments of time, as it is easy to weaken institutions but it takes a long time to rebuild them. Whatever appointments gov­ernment makes to the heads of the institutions should be based on transparency and merit, he said. Faheem Saigol said that the economy has just come out of the dark shadows but it is still facing the after­shocks and the businessmen are doing their best to makeup the losses incurred during that period, the PIAF chairman said.

He said that only direct taxes can improve tax collection, as the existing tax system is heav­ily skewed toward indirect taxation. PIAF chairman said the registered businesses are required to comply with vari­ous departments involving a lot of financial and time resources, whereas unregistered busi­nesses are free from all such hassles, he maintained. He also emphasised that concentrating on import substitution is im­perative to narrow import bills and certain imported products such as oil are of a fixed na­ture, therefore, the government needs to enhance focus on im­port substitution industries, as chemicals, agriculture and steel are potential industries.

He said that undertaking structural reforms require po­litical will. He said that enact­ing structural reforms, such as improvements in tax collec­tion system, bureaucracy and ease of doing business requires major political will and strict implementation of policies, he added. He stressed the need for reforms, with a keen focus on value-addition for a sustain­able economic growth, recom­mending the government to raise exports to double digit of the GDP, as Pakistan’s exports have bounced back after wit­nessing decline. He said that consistent borrowing by devel­oping economies to shore up its reserves in desperate times is only to lead towards a debt trap. He said that borrowing from friendly countries should only be seen as a short-term so­lution to prevent reserves de­pletion and consequent further depreciation of the currency.

PIAF chairman stressed that focus should be on promoting exports and restricting imports alongside making domestic in­dustry more competitive and subsequently expand its export market. He said that exports of goods and services are an injec­tion into the circular flow of in­come leading to a rise in aggre­gate demand and an expansion of output, helping raise per cap­ita incomes and reduce extreme poverty especially in developing economies like Pakistan. He ob­served that the donor agencies should be considered as a stop-gap arrangement, which may have forced excessive devalua­tion, steep monetary tightening, cut in development and defence expenditures. Loans simply serve to bridge the gap until the effects of the reforms take ef­fects. The problem occurs if the country takes loans but fails to reform, he added.