ISLAMABAD, Aug 01 (APP):Economic researchers have stressed the importance of strong political will, the rule of law, low-rated broad-based taxes, spending restraint, a robust currency, and business-friendly regulations to attract investments and foster economic growth in the country.

In a Twitter space discussion titled “Can IMF Stand-By Arrangement and Budget 2023-24 Spark Economic Revival,” hosted by PRIME, (Policy Research Institute of Market Economy), an economic expert Rizwan Rowji emphasized the importance of eradicating corruption and achieving sustained economic growth of over 8 per cent plus as key to minimising economic woes.

He emphasized that economic revival is unattainable without strong political will, judicial reforms and ensuring the rule of law. The focus of the discussion was the latest addition of PRIME’s latest quarterly economic report titled Prime Plus released on July 24.

Dr Idrees Khawaja stressed the importance of crucial reforms to revive the economy and tackle uncertainties. He emphasized the critical role of a robust judiciary and the rule of law in attracting investment. Swift dispute resolution and increased awareness about corruption in schools and colleges are equally vital.

Ali Salman, the Executive Director of PRIME, remarked that the budget follows previous patterns with a few reforms and positive indicators. Nevertheless, there are no significant reductions in public expenditures, and the impact of privatization is limited. Increased taxes on the salaried class have led to tax evasion issues.

The differentiation between filers and non-filers continues to pose challenges. With the sales tax set at 18 per cent, Ali Salman suggests lowering it to 5 per cent as it is too high. Additionally, the tax exemption regime is doing more harm than good.

According to Tuaha Adil, a research economist at PRIME, the country’s annual expenditures shown in the budget amount to 14.46 trillion rupees, representing a significant increase from the previous year’s 10 trillion. Debt servicing saw a 50 per cent rise due to currency devaluation and higher interest rates.

The government aims to reduce long-term inflation to five to seven per cent by 2025. Additionally, ongoing efforts are focused on enhancing the business environment, he stated.

According to Zeeshan Merchant, a tax and corporate law consultant, the government should reduce tax rates, but it is doing the opposite, resulting in corporate entities paying less tax than individuals.

He finds the current tax system highly unjustified and suggests introducing new taxpayers. Zeeshan also believes that taxing the retail and agriculture sectors is necessary, as their contribution to the national economy is less than one per cent and it impacts other sectors adversely.