There are no two opinions about the fact that Pakistan currently is faced with formidable economic challenges in the shape of burgeoning budget and current account deficits and a heavy debt burden which are having a debilitating impact on the socio-economic profile of the country. Reversing the trend and saving the country from the impending economic disaster would depend on raising indigenous resources rather than looking elsewhere for help and ephemeral relief packages in times of adversity as has been the practice in the past. That is a recipe beyond reproach.

But unfortunately there is a well entrenched culture of non-payment of taxes in the country and successive governments have failed to introduce the much needed structural economic reforms and broadening the tax base due to political expediencies. Their policies lacked the vision to look into the future consequences of such an approach.

Prime Minister Imran Khan was right on money when making an appearance in Geo TV programme ‘ Pakistan Key Liey Kar Dalo’ on Monday along with his team of economic manager said” Pakistan is at the cross-roads and people will have to change themselves. We do not pay taxes. We have to change ourselves. Our tax collection rate is the lowest in the world and Pakistan cannot continue as a state with the current state of affairs. To return the loans we will generate wealth from within Pakistan which means we will have to face some difficult times” He not only painted a correct picture of the existing realities but also honestly admitted the fact that the steps that his government is contemplating to take to reform the economy and broadening the tax base would surely entail difficulties. His emphasis was rightly on changing the permeating economic environment.

There is no denying the fact that Pakistan’s external and public debt as well as nosedive in the foreign investments. The lack of fiscal discipline and absence of reforms caused 400% increase in public debt during 2018 as per the data released by the State Bank of Pakistan. Total debt liabilities of Pakistan increased to 86.8 % well above the debt sustainability limit of 60% of GDP. Likewise, external debt liabilities rose to 33% of GDP over the last 10 years. With increased borrowing to finance investment and consumption, external debt servicing surged to about $10 billion or 40% of export earnings in 2018-19. It is estimated that interest and loan repayment on both foreign and domestic debt consumed 39% of the total revenue in 2018-19.

The foregoing facts indicate the severity of the challenges that the PTI government inherited in regards to the economy. It had no choice but to take further loans to repay the already taken loans and also seek immediate assistance from the friendly countries and approaching the IMF for the thirteenth bailout package since 1988.

The country surely could not survive by relying on help and assistance of the friendly countries and the international agencies. The only way to winch it out of the quagmire it is stuck into is to raise indigenous resources through taxes not only to cast off the debt burden but also to generate enough resources for financing the future development needs and implementing measures for the wellbeing of the masses. The government cannot fulfill these responsibilities through printing of notes. Ultimately the people will have to make investment into their prosperous future by realizing their duty towards the state and developing the habit of paying the state taxes. No doubt the government is also under obligation to create tax culture through credible measures and people friendly policies.

Venturing to change the existing culture would admittedly cause hurt and difficulties as also pointed out by the Prime Minister in his interaction with businessmen in the Geo TV programme. The raising of tariffs on gas, electricity and oil during the last ten months and other revenue generating measures and the steps suggested in the budget to expand the tax net are the much required ingredients of the approach to fix the economy. They were imperative and the government showed rare commitment and courage to put them into place without fearing for the political backlash and the flak directed at it by its political opponents and the vested interests.

The Amnesty or the Assets Declaration Scheme announced by the government is also a laudable step to document the economy and afford an opportunity to the people and the businessmen to declare their hidden assets and participate in the national effort to bid adieu to non-tax paying culture and taking the country to the path of self-reliance and sustainable economic development. Currently the informal economy in Pakistan accounts for 35-50% of the total economy which is an alarming situation and is also one of the stumbling blocks in the efforts aimed at socio-economic development.

For the government to be able to plan future economic strategies and lifting economic profile of the country it is imperative to document the economy and to create and diversify the avenues of revenue generation with a futuristic view. That is exactly what the government is trying to do. The Prime Minister took pains to explain the rationale of the scheme and the benefits it will accrue to the people simultaneously extending assurances that the taxes raised would be spent on the people and retiring the debt burden. His passionate appeal to the people to come forward and have trust in the government was very much required in the backdrop of the existing lack of trust in the government by the people in regards to spending the money taken from them.

People need to understand that the government does not have a magic wand to fix all the maladies afflicting the economy and orchestrate a turn-around without their participation in this national effort through payment of taxes and doing business in a transparent and legal way. That is how they can help themselves and the country to have a prosperous future. The Assets Declaration scheme affords them the best possibility to begin that journey.

The writer is a freelance columnist.ashpak10@gmail.com

We do not pay taxes. We have to change ourselves. Our tax collection rate is the lowest in the world and Pakistan cannot continue as a state with the current state of affairs.