Pakistan is facing economic challenges with a rise in inequality and poverty, alongside the Federal government nearing bankruptcy, as per reports from the Pakistani media. The Business Recorder in Karachi advocates for export-driven growth to create economic opportunities and improve governance in public services, particularly in education.
The article highlights the reluctance of political parties to decentralize power to local governments, resulting in limited efforts to expand taxation at municipal and provincial levels. This places a heavy tax burden on the federal government, especially on formal income, while inefficiencies in the energy sector lead to high power costs affecting the competitiveness of exporters.
Notably, tax collection on land is notably low, with Punjab collecting less in property taxes than a single major Indian city. The article points out the underutilization of agriculture income tax and sales tax on services, coupled with high taxation and energy costs burdening the manufacturing sector.
The Federal government’s financial situation necessitates support from provinces, urging for a broader tax base involving all stakeholders. The article suggests empowering municipalities for tax collection and better amenities to enhance city living standards. Additionally, restructuring the energy sector, privatizing state-owned enterprises, and reducing the government’s size are proposed measures for financial stability.
Inconsistent government policies are identified as a significant barrier to investment, resulting in a decline in both foreign and local investments in export-oriented sectors.
