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Raise in Pakistan exports key to addressing economic imbalances

Federal Tax Ombudsman (FTO) Mushtaq Ahmad Sukhera has said increasing exports is the only viable solution to address the economic imbalance. Addressing the businessmen of the Value-Added Sector at Pakistan Hosiery Manufacturers and Exporters Association (PHMA) House on Friday, he assessed that widening trade and current account deficit and lowering exports were bad for the economy.

“Instead of taking measures to improve exports, the sovereignty has been mortgaged,” he said, while explaining the issuance of sukuk bonds and foreign loans.

Some time back annual exports had risen to $25 billion, which later declined to $20 billion, he said, and assessed, “If exports increased to $30 billion instead, the country had no need to go for foreign loans.”

The FTO said the government should quickly resolve the problems faced by exporters.

He noted the volatile exchange rates and said it would be difficult for the industry to determine prices for exporting goods.

He was dismayed over the low tax-to-GDP ratio and said our neighbouring economies have much better rates. He said India’s ratio was around 18 to 20 per cent of the GDP. Even Bangladesh and Sri Lanka have better ratio than Pakistan, he decried.

The FTO said there was a trust gap between the Federal Board of Revenue (FBR) and taxpayers. “The tax machinery has created trust deficit and people do not want to come into the tax net,” he evaluated.

The FBR should change its priorities and pursue potential taxpayers, instead of harassing existing ones. “Once an audit notice is issued, a taxpayer faces problems,” he explained.

The Ombudsman asked the FBR to change its attitude. “The FBR should change audit parameters and instead of harassing the genuine taxpayers, the priority should be identifying suspicious transactions,” he suggested.