Road to progress

 

Following its dismemberment in 1971, Pakistan is currently facing the gravest crisis in its history. Its foreign reserves have decreased to $5.8 billion, which includes $5 billion in deposits from China and Saudi Arabia that must be utilized under specific conditions. By March 2023, Pakistan must repay approximately $8 billion in loans. There is a rumor that the IMF has declined to negotiate with the current government due to its unfulfilled commitments in the past. Additionally, other aid organizations are reluctant to assist the nation further. So, what is the next step?

First of all, it is unfortunate that we continue to import milk, cheese, corn flakes, chocolates, tobacco for cigarettes, and even cat food from abroad despite our severe currency shortage. Imports of luxury goods like cosmetics and luxury vehicles continue. Our local economy has been severely impacted as a result. To encourage local industrial development and the export of value-added products, we must immediately ban all non-essential imports or, if this is against international or WTO law, impose a significantly high tax rate on these products.

Second, we need to change our policies and stop relying on loans from abroad so that our spending is lower than our income. We might be able to lower our debt to other countries as a result of this. We should allow the Pakistani rupee to fall to about Rs260 or Rs300 per dollar in the short term because this will increase exports and reduce imports. The poor will be negatively impacted by an increase in the costs of imported edible oil, electricity, and fuel as a result of this policy. To compensate, welfare programs that provide monetary assistance to the poor should receive Rs500 billion. This will help alleviate some of the suffering caused by these policies.

Thirdly, in a nation of 220 million people, there are only 3.4 million taxpayers. We need to impose a substantial agricultural income tax that is based not on declared income but rather on the amount of land under cultivation per acre. This will bring in a substantial amount of money. Additionally, the basis for property tax is significantly lower assessments than actual property values. Based on current market prices, they need to be reevaluated. Property taxes will rise by a factor of three just from this one action. Every retail establishment in the nation is required to pay a single, uniform tax regardless of their size or location. Pakistan has approximately two million retail establishments. An additional Rs100 billion annually could be generated by a mandatory retail tax of an average of Rs4,000 per shop per month.

Pakistan should follow India's lead and immediately ban all Rs5,000 and Rs1,000 notes in the country. After four weeks, people should be able to deposit any cash in their bank accounts. The white economy's size and tax burden would both rise significantly as a result. Similarly, importers should only open letters of credit against the production of foreign currency through local purchase or foreign transfer in order to preserve valuable foreign exchange. To compensate them for the high cost of electricity, among other things, preferred industrial high-tech exports could receive export vouchers.

By bringing transparency to the entire process, the utilization of information technology (IT) can significantly improve national tax collection. Making it a legal requirement for all sales and purchases of property, shares, automobiles, or any other assets to be recorded in full on a government website prior to the legal transaction would be an important step in this direction. If citizens' complaints about undervalued transactions are legitimate, they should be independently investigated, and 30% of the additional taxes and penalties should be imposed. The amount that is collected could be given to the complainant as a reward. Black money transactions will be curtailed as a result.

A project undertaken by the Knowledge Economy Task Force, which collaborated closely with NADRA and the FBR to widen the tax net and increase tax revenue a few years ago, provides one example of how IT can bring transparency to tax collection. The program identified 3.8 million non-filers, each with a tax liability of more than Rs100,000 and who should have paid an estimated Rs1.6 trillion in income tax, employing a portion of NADRA's transaction records and cutting-edge AI protocols. The total declared assets increased sharply to Rs3 trillion and the additional taxes paid reached Rs65 billion as a result of this effort, which lasted for three months at no cost to the government. Additionally, more than 90,000 non-filers filed taxes, and more than two million tax returns were filed for the fiscal year that ended on June 30, 2018. In the FBR's history, this was by far the highest number ever. These measures can be extended to all provinces, and non-filers should be prohibited from purchasing tickets for trains or airplanes or from renewing passports, driving licenses, and other documents.

The judicial system's reform is the fourth area we must concentrate on. Transparency International Pakistan's National Corruption Perception Survey 2021 found that the country's police and judiciary were the most corrupt institutions. The World Justice Project Rule of Law Index 2021, which places Pakistan 130th out of 139 countries in terms of security and law and order, backs up this conclusion.

Pakistan is drowning in debt and has accumulated billions of dollars in assets abroad due to widespread corruption among politicians, bureaucrats, senior government officials, and the judiciary. The financial secrets of 35 current and former world leaders, 330 politicians, and public officials in 91 nations have been revealed by leaked documents like the Pandora Papers. These politicians are not all from Pakistan. The solution is to conduct sting operations and impose the death penalty on those who commit massive corruption, as is the case in China, Indonesia, and many other nations.

Putting education, science, and innovation at the top of the national agenda is the final but perhaps most significant step toward progress. In a presidential democracy, where ministers are appointed based on their competence rather than their capacity to spend Rs150-200 million in what I refer to as a sham electoral process in which power rules over merit, this can only be accomplished by a leadership that is sincere and technologically adept.