ACCA (the “Association of Chartered Certified Accountants”) believes that it is time to make radical changes in the approach towards budget and the economic model of Pakistan.
We are compelled to think beyond twelve months and take a medium to long term perspective focusing on inclusive economic growth and development model for Pakistan rather than just managing cash flows and foreign-exchange reserves.
Budget 2019/20 should be based on ‘low-tax-rate’ and ‘broadening-the-tax-base’ philosophy; aiming for GDP growth rate of 7% and improvement in human development index from current level of 0.562 (150 ranking) to 0.800 (<60 ranking) in next 3-5 years.
The policy focus should be more on increasing the size of the documented GDP from ~USD 315 billion (2018) to over USD 1 Trillion, alongside increasing the Tax-to-GDP ratio based on current size of the documented economy.
In the context of the 18th amendment, Prime Minister Office may need to drive progress through coordination committees with representatives from federal & provincial governments and key experts from industry/academia. To make them effective, the size of each committee should not exceed 10-12 members who should be obliged to provide decisions within the stipulated timeframe.
Furthermore, the proposals recommend that the reliance should be on direct taxes including taxation on agriculture sector, inter-corporate dividends should be exempt, evidence of source should be made mandatory for foreign remittances, discretionary power to attach a bank account for recovery should be abolished or revisited, and services should not be subject to minimum tax.
In order to broaden the tax base, increase the involvement of professional accountants to build on-ground infrastructure to facilitate businesses and tax compliances.
ACCA members in Pakistan and abroad are regulated under a single code of ethics and conduct. ACCA believes that the professional accountants in general and ACCA members, in particular, are there to uphold the public trust and to bring the global best practices to drive the economic growth and development, boost business confidence and propel right behaviors for tax compliance.
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