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EditorialMore talks, less action on tax base

More talks, less action on tax base

Pakistan’s economy has taken a toll in the recent past due to various issues. Political instability has acted as a catalyst for economic instability in the country, along with global issues such as the COVID-19 pandemic and the Ukraine-Russia war. Moreover, climate change has exacerbated the already pressing problems. Pakistan is stuck in a vicious cycle of political and economic instability.

In a recent ceremony in the federal capital, Ishaq Dar stated the need to enhance the tax base of the country. He stated that many countries around the world increased their tax-to-GDP ratio after they were hit by the COVID-19 pandemic; hence, Pakistan must also follow suit as there is no other option left. In his opinion, Pakistan’s economic problems can only be solved by detaching economics from politics. He also talked about the incompetence of the previous government and how that increased the debt from Rs 30 trillion to Rs 54 trillion.

While Dar may be right about the previous government’s incompetence in policymaking and implementation, he must take into account the pandemic, which took a toll on the economy. It is true that the country fell into greater debts and the IMF program was halted due to the lack of implementation of the structural adjustments that the International Financial Organization required. However, the previous government did try to enhance the tax base and was successful in some sense. Nevertheless, there were a plethora of problems in the economic policies of the previous government, and this one is not making any different or rational decisions to change the situation for the better.

Ishaq Dar is known for his dollar manipulation policies that allow for greater imports into the country and fewer exports. This overvaluation of currency leads to the depletion of the meager amount of foreign reserves that Pakistan has. He has been hinting towards doing this again, and the consequences of this will surely be negative. In this address, he also mentioned that other countries also manipulate their currencies, so why does Pakistan have to go by the market rates?

It is imperative to understand that Pakistan’s economic situation is approaching that of Sri Lanka. The economy is likely to collapse if swift action is not taken. Dar’s short-term policies may provide instant relief, but this time around, people will not buy this artificiality. The PDM government must think long-term. They should know that the people have become politically and economically aware, and they are ready to face some years of hardship for long-term relief. The tax base must be increased, and measures must be taken to fix the economy, no matter the amount of difficulty it causes.

Moreover, politics can never be taken out of economics and vice versa. The two are interconnected and must aid each other. Once the political ground is settled, the economy will move towards improvement. For this to happen, selfish politics should be set aside, and all those who claim to be true to Pakistan should let go of their false egos and sit at the table to find a solution.

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