The main focus of a rational tax policy should be on incentivising investment and productivity, encouraging savings and facilitating capital formation in the private sector for job creations, innovations and rapid economic development. Our policymakers have miserably failed to achieve these goals-for them taxation means raising money and nothing else. Overemphasis on regressive taxation by the last government of Pakistan Muslim League (Nawaz) could not avert record fiscal and current account deficits. The adoption of failed policy of austerity and continuation of regressive taxation by the Government of Pakistan Tehreek-i-Insaf (PTI) has led the country to stagflation. The rising inflation and decline in GDP growth, coupled with oppressive and inconsistent tax policies, are forcing the business community to search for safer havens abroad, depriving the country of invaluable capital. Similarly, foreign investors are reluctant to avail the tremendous Pakistani talent that goes to waste for lack of proper funding and training.
Pakistan is one of those very fortunate countries of the world that has an abundance of resources and a climate that is fit for simply any activity throughout the year. But thanks to donors’ agenda of overemphasis on taxation and incompetence of our economic wizards (sic), Pakistan’s dependence on imported products has increased manifold, whereas value-added exports have not been given any attention, let alone promoting high-tech industries capable of technological innovations-modern economies are knowledge-based and future is for those who can develop them as quickly as possible.
For technological transfers, rapid industrial growth and employment generation, Foreign Direct Investment (FDI) is desirable. In Pakistan, when local investment is dying, expecting FDI is like living in a Fool’s Paradise. Tax incentives play an important role in attracting FDI-which has nose-dived in Pakistan during the last decade. Tax policy constitutes an important, if not a determinant factor, for favourable investment behaviour. Unfortunately, our budget makers have always been preoccupied with revenue targets and have never bothered to provide some long-term investment-oriented tax incentives for infrastructure development, investments and employment generation, without which sustainable growth is not possible.
Pakistan is in dire need of establishing country-wide “Employment Zones’, which should be low-tax or tax-free for companies establishing vocational institutes and creating new jobs, especially for women
Economic challenges faced by Pakistan are multiple and grim-we are ensnared in a deadly debt trap, but there is no plan or strategy on the part of the rulers to come out of it by exploiting the untapped assets, revolutionizing agriculture and stopping wasteful and unproductive expenses. Pakistan faces the Herculean task of providing jobs to at least two million young people every year. For achieving this task we will have to ensure that economy grows at the rate of at least 7% per annum over a long period of time-for this we need investment of 20% of GDP. This challenge is also our great opportunity for economic progress. Majority of job seekers are young people, who are our greatest asset-imparting education and skills to them and creating matching jobs is the real challenge. This can be met successfully by assignment of taxes for productive investment and employment generation-our real engine of growth. The prevalent pessimism is due to the attitude of rulers and financial managers, who cannot think beyond what they are “commanded” or “trained” to think. They keep on telling us about the symptoms of an ailing economy but never try to cure the real causes of illness.
Huge unproductive workforce in various governments (federal, provincial, local and corporations) nearly four million people, who waste time and money, creating mostly hurdles for citizens and businesses rather than serving them. A major transformation is required to cut off this burden on the economy.
Pakistan has been facing increasing fiscal and current account deficits, burgeoning debt, an ever-worsening unemployment crisis and a perpetual challenge of rapid industrial growth. But no government has ever thought of earmarking of revenue for ’employment zones’. Such employment zones can cater for:
Source ; https://dailytimes.com.pk/376439/policies-for-growth-employment/?fbclid=IwAR06DNtGw74QYDTxWIGh3zQvvapisxoraLjA7y1QAhe85JzVm2DQVE7XmfM
