Structural reforms

Three loan agreements have been signed worth $918 million with the World Bank to implement the much needed structural reforms in the economy. These reforms shall be carried out by the Federal Board of Revenue (FBR) for substantially increasing the quantum of domestic revenue generation; by Khyber Pukhtunkhwa Revenue Authority (KPRA) for revenue mobalisation and by Higher Education Commission (HEC) for enhancing the quality of higher education and research.

FBR will utilise the loan component of $400 million for broadening the tax base and appreciably enhancing the compliance rate by the potential taxpayers who have not so far been brought under the tax net. At present tax to GDP ratio is stagnant at 10 percent which shall be increased to 17 percent. The number of active taxpayers shall be increased from the existing 1.4 million to 3.5 million. How this ambitious target can be achieved is a million dollar question? The tax bureaucracy of Inland Revenue Services Department is sluggish, dishonest and inefficient. In bulk non-delivery of tax notices to tax evaders by the courier services because of invalid addresses on envelop is a glaring example of incompetence and dishonesty. The tax compliance cost is high and tax collection always remains short of target by big margin. In the outgoing fiscal year revenue short fall of Rs. 420 billion has been witnessed. The efficiency of custom control shall be improved. Although the performance of Custom Department of the FBR is much better but the issue s of under invoicing in imports and over invoicing are yet be overcome. The Chinese exporters to Pakistan indulge in massive under invoicing depriving it from billions of rupees in import duty. The trade data they had provide to the Chinese governments last year widely differs from the one compiled by the custom authorities of Pakistan. Capacity building of custom appraisers is inevitable.

Khyber Pukhtunkhwa government will get $118 for implementing Revenue Mobalisation and Resource Management Programme. The programme will help the provincial government to explore and tap new sources of revenue mobalisation and enhance capacity of government departments for judicious and maximum utilisation of available resources that are generated from the provincial sources and the ones provided by the federal government from the divisible pool of tax revenue under the 7th NFC Award in addition to the foreign economic assistance. The financial resource utilisation capacity of government departments is limited and hardly 24 percent of budgetary allocations are spent on the projects of socioeconomic uplift in every fiscal year.

The multilateral donor will provide $400 million to Higher Education Commission (HEC) for improving the quality of education, enhancing the standard of research work, improvement in teaching skills and learning and equipping the students with modern technology and other related fields. Ironically, the feudal and mercantile classes dominated leadership of political parties has restricted to greater extent the mandate of HEC in these areas under the much eulogized 18th Amendment. As a preemptive move to protect the fake degree holding law makers from the hanging sword of disqualifications HEC had been declared dissolved and devolved to the provinces. But the decision was made null and void by the Supreme Court of Pakistan. The Apex Court in its verdict given in April, 2011 ruled against the devolution of HEC to provinces under the 18th Amendment. The provincial governments have stopped funding to public sector universities and hence they do not have overwhelming control over the academic and research activities except manipulating to some extent the merit for the appointment of faculty and total say in the appointment Vice Chancellors on political consideration. The appointment of Vice Chancellor Agriculture Universality Sawabi is a classic example. The university Syndicate Mafia comprising the old guard faculty members is the major bottleneck in the selection of intelligent and dedicated young faculty strictly on merit, instrumentation of science, engineering and technology labs with latest equipments and required training for their application during experiments, purchase of latest editions of reference books, getting subscriptions of top notch international research journals and providing access ID to students. Let us hope the World Bank loan shall be honestly spent on the agreed structural reforms.