Proposed budget depicts lack of creative thinking to address economic challenges: IPS webinar.

ISLAMABAD -- The government can only improve its revenue side by creating an environment conducive for economic activity especially in the current unprecedented challenging external and internal circumstances. However, the budget presented by the federal government shows severe lack of any well-thought-out approach in policy- and budget-making in the turbulent times Pakistan is faced with.

These views emerged at a webinar on Federal Budget 2020-21 organized by Institute of Policy Studies (IPS).

Khalid Rahman, Executive President, IPS said that the country is experiencing extraordinary circumstances and in this situation some innovative ideas were expected in the proposed budget. Addressing the economic challenges the country is experiencing needs out-of-the-box thinking to boost revenue generation, he stressed.

He deplored that the country's actual problem is governance deficit, which is going from bad to worse. 'Examples of this can be seen in the petrol shortages and healthcare issues during the pandemic,' he said.

Zaheeruddin Dar, former civil servant, and economic policy analyst expressed his concern that a 27 per cent increase in FBR revenue was unrealistically expected in the budget. The FBR tax collection target has been set at Rs4.963 trillion while the revised estimate of the closing year was Rs3.908 trillion. In the current situation even collecting Rs3.500 trillion would be a miracle, he remarked.

He said all FBR revenues are consumption related including sales tax and customs duty. Tax collection will not increase without generation of economic activity. 'More revenue cannot be collected just by hiking tax rates,' he added.

Over the years Pakistan has not invested in those sectors that can generate additional revenue. He said education, health and economic infrastructure are the three sectors that provide enablement to those economic sectors that generate revenue.

He said the country's consumption pattern is changing. The lower middle income and lower income groups are highly sensitive to inflation and their consumption patterns change immediately. The government must protect the lower middle income and lower income groups even at the cost of higher income groups.

Mirza Hamid Hasan, former federal secretary, water and power also seconded Dar stating that the government has projected a 27 per cent increase in tax revenue collection next year without any changes in the tax structure or collection system. 'This looks like wishful...