Editorial : The agenda - Monday, May 02, 2011

Source : http://thenews.com.pk/TodaysPrintDetail.aspx?ID=44726&Cat=8

The dismal economic situation has compelled an umbrella organisation of the corporate sector -- the Pakistan Business Council (PBC) -- to come up with a "National Economic Agenda" and drive home the point that the economy needs urgent attention. The initiative to develop such an agenda should have come from the political parties; for in democratic societies it is politicians who are expected to develop a vision in the face of challenges, find opportunities, mobilise public opinion and inspire people to overcome difficulties and strive for change. But at a time when the country is caught in a vortex of low growth and double-digit inflation, our rulers and politicians appear to have no sense of direction; capable neither of leading from the front nor of taking the right action at the right time. The government has been dragging its feet on the crucial question of reforms for too long. Its inaction, half-measures and lack of strategy have cast a spell of gloom which is not only affecting ordinary citizens but has badly hit business and industry. Parliament is being blamed for "the tragedy of delay.” It stands accused of being an obstacle to reforms.

In an unprecedented move, the PBC brought representatives of the major political parties -- including the Pakistan People’s Party, the major factions of the Pakistan Muslim League and the Muttahida Qaumi Movement – to its meeting on Friday last week in Islamabad, for them to agree on a minimum framework for key economic reforms. Most of the recommendations made by the PBC are pieces of advice given countless times to successive governments by local and foreign experts. They include proposals such as generating additional revenues of Rs300-400 billion within the present tax regime through better coverage and enforcement, broadening the tax-base of direct taxpayers and documentation of the economy. The PBC has also called for steps to tackle the problem of over- and under-invoicing and measures to block Afghan Transit Trade leakages. It has advocated reforms for the enforcement and collection of a tax on agriculture. The PBC estimates that these measures, if added to the present policy of taxing incomes, would increase the tax-to-GDP ratio to 15 percent in five years time from the present, slim nine to 10 percent. A rise in revenues, then, will help keep fiscal deficit at a manageable 4.0 percent. The body has also recommended that the government restructure loss-making public-sector enterprises and give targeted subsidies to the poor. Although the political representatives gave a nod to these proposals which in fact have been there for ages, the real test will be when they prepare and approve the budget for the coming fiscal. Will our politicians and parliamentarians go for the reforms our economy needs at this crucial juncture? Their past gives little hope, but the sense of desperation on the Pakistani street, the growing realisation among interest groups of the gravity of the situation and the international pressure might nudge our reluctant parliamentarians into taking the plunge. Let us hope that this parliament proves its critics wrong – at least for once!

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