New budget to increase poverty: PEW
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The Pakistan Economy Watch (PEW) on Sunday said taxation measures expected to be introduced in the upcoming budget will add to prevalent poverty in the country.
There would be no significant growth in the GDP due to depressed economic situation as authorities continue to focus on short term measures ignoring long-term strategies, it said.
The budget of the fiscal year 2014-15 will be focused on mobilising revenue from the existing taxpayers with little effort to broaden the shrinking tax base, said Dr. Murtaza Mughal, President PEW.
Salaried class and corporate entities would be forced to pay additional Rs 250 billion to reduce the deficit as government would continue to prefer indirect taxation which is around 61 per cent of the whole collection, he said.
Dr. Murtaza Mughal said that manufacturing with 22 per cent share in GDP would be forced to pay more than 67 per cent of the total tax revenue collection while the retail sector with 18 per cent share in the GDP would continue to enjoy unannounced tax holiday.
The government would continue to compromise on properly taxing services and agricultural sectors, while tax collection would decline in majority of the provinces due to vested interests, he added.
Dr. Murtaza Mughal noted that simplification of regressive tax regime would continue to discourage investment in the next fiscal, companies would continue to cry for refunds in a discouraging environment.
The revenue targets would remain unachievable due to absence of capacity, capability and will of all the stakeholders including the FBR as well as the ruling party.
Energy crisis would continue to disturb masses and the production activity missing tax targets prompting government to cut public sector development expenditures as efforts to reduce non-development expanses has always failed. .
Dr. Mughal said that government would continue to push flawed policy of stabilising currency and foreign exchange reserves through foreign loans.
