Pakistanis 'must learn to live with tax realities'

Pakistan will cut the retail price of petrol if global oil prices come down, according to Minister of Finance Shaukat Aziz.
He said that despite imported inflation due to high oil prices — Pakistan paid $1.3 billion extra last year for oil imports — the country is on the road to recovery.
Pakistan has set a tax revenue target of Rs430 billion and hopes to increase its export earnings to $10 billion next year, Aziz said. He noted that the tough new tax regime is opposed by people who have avoided payment for decades.
"Tax avoidance has been very high and the tax to GDP ratio is below 14 per cent — one of the lowest in the region. Therefore, it is time to put the house in order and the business community and people at large learn to pay legitimate taxes to ensure economic stability. These are bitter pills but essential to meet economic ills," he said.
Aziz said the price rise in general was inevitable due to the substantial rise in oil prices.
"Thus, we are suffering from imported inflation. But the government is committed to reducing domestic prices if oil prices come down and pass the benefit to consumers. I am waiting for that day," he said.
"Yet the country is on the road to economic recovery as indicated by the GDP growth of 4.2 per cent last year compared to 3.2 per cent the previous year. Agriculture has grown by 7 per cent and the service and manufacturing sectors too performed well with the textile sector alone investing $500 million in new machinery.
The trade deficit and current account deficit improved and the IMF programme is expected to be finalised by next month. This will allow the country to borrow money from the World Bank, Asian Development Bank and others, paving the way for an inflow of money for development projects, which will boost economic activity.
Aziz expressed the hope that within three years Pakistan will be able to end its dependence on IMF loans, although it will borrow from the World Bank and ADB.
Debt has been a major problem since a lot of borrowed money was not used judiciously, thus the need to restructure and reschedule loans to ensure the cash flow is in line with return.
Negotiations are under way with the Paris Club and London Club. The proceeds from privatising banks, telecommunications, gas and oil will be used to pay off debts.
Pakistan has been passing through a critical period as years of economic mismanagement had a cumulative effect. The main objective is to stabilise the economy and put the house in order.
The country has a very high degree of both domestic and foreign debt, growth has been lacklustre, fiscal deficit too high and the export growth has not been very satisfactory.
He said 55 per cent of national income goes for debt servicing, which does not provide any flexibility, and this brought about the need for wide-ranging tax reforms.