PAKISTAN READER

Photo : Dawn

Tax evasion estimates around PKR 5.8 trillion

In Focus
Tax evasion estimates around PKR 5.8 trillion 
On 25 March, according to The News International, Pakistan faces a large number of “tax evasion” of around PKR 5.8 trillion per year, comprising 6.9 per cent of GDP. The tax compliance gap was estimated PKR 996 billion through smuggling.  As per the presentation given by Prime Minister Shehbaz Sharif Special Investment Facilitation Council (SIFC) the tax evasion was calculated for about PKR 5.8 trillion annually on the basis of fiscal year data of 2022-2023. During the presentation, participants were told that oil was allegedly smuggled into Pakistan through Iran and other border areas. The tax evasion in the retail sector is estimated to be PKR 888 billlion, whereas in transport sector it is estimated PKR 562 billion, independent power producers (IPPs) were PKR 498 billion, smuggled prone items were calculated for PKR 355 billion, and real estate was estimated PKR 148 billion annually. The tax evasion of the ‘others’ category was estimated at around PKR 1.607 trillion annually.

Meanwhile, the IMF in its Diagnostic Report found that the policy level tax gap was not on the larger side, however it could reach a maximum of 12.9 per cent of the GDP. The presentation further elucidated that the compliance gap flowed between the total revenues and expenditures. The federal tax revenues marked at 9.1 per cent of the GDP, whereas the federal non-tax revenue was at 1.2 per cent of GDP. Around 1 per cent of the provincial taxes were contributed to the GDP. The revenues marked around 11.4 per cent of the GDP. On the expenditure side, the federal expenditure to the GDP is estimated to be around 12.9 per cent, whereas the provincial expenditure totaled around 6.1 per cent. Therefore, the total expenditure is estimated around 19 per cent of the GDP. Nevertheless, there is a gap of 7.6 per cent of GDP prevails between the total revenues and expenditures of the country. According to an independent economist, the tax evasion, so called fiscal gap is rendered through borrowing from the domestic and external avenues, thus pushing the country into a debt trap. With the volatile fiscal position, the government is aiming to restrict the FBR through “Federal Policy Board, separation of Tax Policy Office, joint valuations, separation of Customs and Inland Revenues, collaboration with Nadra, PRAL restructuring, digital invoicing, SWAPS, Tajir Dost Retailers Scheme, documentation law and modern governance structure and oversight boards.”(Mehtab Haider, “Tax collection gap stands at whopping Rs5.8tr in Pakistan,” The News International, 25 March 2024)

In Focus
"China and Pakistan should join hands to devise and deploy the security policy according to new realities" argues an analysis
On 25 March, an opinion piece in The News International by Shakeel Ahmad Ramay stated that peace was anticipated after the exist of US and allied forces from Afghanistan, nevertheless, peace had no alternative. Ramay in his opinion asserted that after the withdrawal, terrorist groups such as ISIS started resurfacing and thus destructing the peace in the region. Pakistan was the first country to be targeted, they attacked Pakistani armed forces and civilians. Along the sidelines of the major attacks, the terrorists had a keen interest in China-Pakistan relationship and their mega CPEC projects, employees precisely in Balochistan.

The recent attacks in Gwadar port, a grand project of CPEC was swiftly intercepted by Pakistani forces. According to the initial assessment, the terrorists had the support of the support of the geopolitical players in foreign countries. To avert the peaceful rise of China, attacks are carried out targeting CPEC and Chinese citizens in Pakistan. The terrorists wanted to break China and Pakistan relations in order to thrive in the region and beyond. Thus, provoking indifferences between the two countries could lead to forming a web of destruction in China’s surroundings. According to Ramay, the terrorists have been working towards inflicting a negative image of China on Pakistan. They launched “warlord public diplomacy” against Pakistan and China to tarnish their successful economic corridor. Ramay further added that they have carried out malevolent campaigns such as debt traps in order to blame CPEC for Pakistan’s current economic upheaval.

In his opinion, he argues that Pakistan should restructure its security devices and “devise a security policy” for geopolitical players. On the domestic line, Pakistan should differentiate between the two phases of CPEC as it revolves around the industrial and agricultural cooperation. As hundreds and thousands of workers are involved in the industrial and agricultural front it is not viable for Pakistan to deploy security personnel to everyone, he added. He further noted that there should be two tire security fronts, one is the police, as they are the leading force on the ground, second, the army should be deployed to protect grand infrastructure such as Gwadar port. In order to curb FGW, Pakistan will have to approach the DIMEC ((Diplomacy, Information, Military, Economy and Culture) framework. Ramay states that it is impossible for a single institution to contribute to a country’s development, hence all the sectors of DIMEC should cooperate.

On the geopolitical front, according to Ramay, Pakistan will have to exhibit a “proficient, multidimensional and smart policy”. Security audit must be conducted for CPEC, and the focus of the audit must be not only on Pakistan’s enemies but also on its friends and rivals, he added. According to him, Pakistan’s army should make a swift move to protect the interests of Pakistan at the international level. Meanwhile, he said: “China and Pakistan should join hands to devise and deploy the security policy according to new realities.” The terrorists not only attack CPEC projects, they further attack all the Chinese investments in Africa. Since CPEC is a mega project and a symbol of long standing relations between China and Pakistan, it is the primary target. In addition to this, US and its allies have also deployed institutions like the IMF to add pressure on Pakistan in order to compromise on CPEC and its relations with China. And therefore, both countries should join forces to curb the threats. According to Ramay, China and Pakistan can launch innovative programmes to counter “5th generation warfare and malicious propaganda”. China and Pakistan can also boost cooperation under the Global Security Initiative (GSI) as it has the potential to ensure people’s security and prosperity. Subsequently, through this, both countries can also engage with other competitors to lower the risk of security. To conclude, Ramay said: “New government in Balochistan must be supported to tackle security, livelihood and development issues.” And that CM Sarfraz Bugti is vigilant to do so. (Shakeel Ahmad Ramay, “Gwadar attack, CPEC and big picture,” The News International, 25 March 2024)

In Brief
PROVINCES
Sindh: “Bhutto should be considered a national hero of democracy” says PPP Sindh President Nisar Khuhro
On 24 March, Pakistan Peoples Party (PPP) Sindh President Nisar Khuhro asserted that after 12 years of Pakistan President Asif Ali Zardari filed a reference, the Supreme Court ruled that ulfikar Ali Bhutto was treated unfairly and said that he had not gotten a fair trial. Khuhro, while addressing the media said: “Bhutto should be considered a national hero of democracy.” On 4 April Bhutto’s death anniversary, the Pakistan People’s Party (PPP) will pay its respect to its party founder, and the former prime minister will also hold a public gathering in Garhi Khuda Bakhsh, however, due to Ramazan The meeting will be scheduled after Iftar. He further said that PPP formed the majority in the assembly without demanding for ministries. Furthermore, while replying to a query he asserted that as Zardari played a prominent role in the 18^th amendment, he would complete his tenure by defending the democratic system. He also said that the long-standing issue, the National Finance Commission (NFC) Award would be given in 2025. Replying to a question about rendering Sindh’s lands to the corporate sector he said: “private sector would settle the lands and then do the handover.” (Aftab Ahmed, “Bhutto should be considered a national hero of democracy” The News International, 25 March 2024)

Punjab: Special polio campaign commences in seven districts
On 24 March, according to the head of the polio programme and Punjab Emergency Operations Centre (EOC) Coordinator Khizer Afzaal a “special polio eradication campaign” will be commenced in seven districts of Punjab. The districts include Multan, DG Khan, Dera Ghazi Khan, RY Khan, Faisalabad, Kasur and Okara. The campaign is said to be conducted for seven days in Faisalabad whereas in other districts it will last long for five days. Around 30,000 polio workers and supervisors are said to participate in the drive to “immunise 4.5 million children” under the age of five. The EOC coordinator cautioned by stating: “Amid poliovirus circulation in other provinces, Punjab has not reported any polio case since October 2020 which is an achievement of the programme. But, movement of population from core reservoirs to Punjab was one the major causes of virus importation in Punjab.” Afzaal further ensured that the Punjab government through the health department “ensuring the safety and security of polio workers”. Highlighting the need for the vaccine, the EOC coordinator said that multiple doses of Polio drops are the best protection against poliovirus. (“Special polio campaign in seven districts begins today,” The News International, 25 March 2024)

SECURITY
Torkham border closes after the scuffle between FIA and FC
On 24 March, according to the sources, six Federal Investigation Agency (FIA) were injured in a confrontation with Frontier Corps (FC) personnel at the Torkham. The clash occurred in the Immigration Section at Zero Point on the border. In their defense, FC officials said that they were bound to check the documents, however, refuting the statement FIA staff said that FC men had no work in the immigration section. According to the locals, six of the FIA were injured and were taken to District Headquarters Hospital in Landikotal. Due to the clashes, the Torkham border crossing was closed to all types of traffic and was resumed after four hours. (Abuzar Afridi, “Torkham border closed after FIA-FC clash,” The Express Tribune, 24 March 2024)
 
EXTERNAL
PIA to resume flights to UK, says FM Ishaq Dar
On 25 March, upon his brief visit to London following the First Nuclear Energy Summit, Foreign Mini­ster Ishaq Dar said that PIA flights to the UK will resume “in weeks, not months” and he has taken up the topic of banned flights with the British government officials. In London, Dar met Minister of State of the United Kingdom for Development and Africa Andrew Mitchell, as well as Minister of State for the Middle East, North Africa, South Asia Lord Tariq Ahmad. According to the sources, the resumption of PIA flights to the UK came along the sidelines of the meeting, and Dar has urged the UK officials to look into the matter. On 24 March, Dar said: “I travelled here on a British Airways flight, and many Pakistanis on the flight asked me to work on this. I am aware of the challenges Pakistanis are facing due to this issue. It takes USD 20,000 to send a coffin by another airline. It is not a matter of months but weeks.” Furthermore, regarding the questions about the congressional testimony of a senior State Department official Donald Lu and implication of election results, he said: “Our election process is standalone, no government or party should or can be influenced.” (Atika Rehman, “Dar hopes PIA’s UK operations to resume soon,” Dawn, 25 March 2024)

ON AFGHANISTAN
Pakistan delegation to visit Kabal for trade talks
On 25 March, according to The News International, Pakistan delegation led by Secretary Commerce of Khurram Agha will be visiting Kabal for holding talks for normalising the trade relations under the Afghan Transit Trade (ATT). The two day visit is presumed to ease out the differences and aims to build measures to reduce the tension in the border areas. Foreign Office Spokesperson Mumtaz Zahra Baloch said: “Pakistan remains committed to promoting trade and people-to-people ties with Afghanistan.” The other delegates include Joint Secretary Ministry of Commerce Maria Qazi, Additional Secretary Commerce Wajid Ali Khan, Director General Transit Trade and Additional Secretary of Interior Khushal Khan. The meeting is said to be the first high-level interaction between both sides after the recent tensions in the border areas. (“Trade talks with Kabul today,” The News International, 25 March 2024)

Pakistan to start second phase of repatriation drive
On 25 March, according to Dawn, Pakistan commenced the second phase of its “repatriation drive” to send around one million ‘documented’ Afghans back to their country by directing the district authorities and the police to map and collect data on those people. An official privy to the development asserted that the instructions had been issued to district administrations and police to expedite the mapping of Afghan Citizen Card (ACC) holders. However, no data has yet been announced, but an official said that the repartition campaign of ACC holders could begin in mid summer, followed by directives from the federal government. Khyber Pakhtunkhwa’s additional chief secretary Abid Majeed said: “We have already started the mapping process.” (Ismail Khan, “Second phase of Afghan repatriation in the works,” Dawn, 25 March 2024)

“The Ambassador-Designate of Pakistan to Cote d'Ivoire, Mr Mahmood Akhtar Mahmood, called on President Asif Ali Zardari, at Aiwan-e-Sadr” - AbdulGhaffarMalano “The manner in which PTI's social media led the Haqeeqi Azadi movement last 2 years, especially during the election campaign after the Bat symbol was taken away from PTI and amidst cellular and Internet connectivity issues on February 8th, is truly a Harvard case study. We are immensely proud of our PTI social media team.” -Atif Khan “On this day in 1992, Pakistan won the ICC World Cup under the captaincy of Imran Khan.” - Wajahat Kazmi

“It is important for the PTA to understand the laws and court orders that pertain to its jurisdiction” -An opinion in Dawn, ‘Censorship with impunity’