In a seminar organized by Allied Bank in Lahore, attended by the Chairman Federal Board of Revenue (FBR), Members of Tax Reforms Commission, Senior Income Tax Officials, leading tax consultants and representatives from Tax Bar, LCCI members, professional accountancy firms along with various commercial and corporate obligors, Chief Executive Officer-ABL Tahir Hassan Qureshi presented a study on “Private Sector Credit and Growth in Tax Revenue” in which it was shown that private sector credit to GDP ratio of Pakistan is one of the lowest in the world at 15 percent. Formal credit in Pakistan is $51 billion, whereas, Pakistan’s GDP is over $270 billion.
Mr Qureshi said that Pakistan’s credit to GDP ratio is even far behind compared to developing/regional countries and gap between formal and informal sector credit is widening; with majority of borrowers seeking expensive credit from secondary and informal sources.
He pointed out that conducive taxation regime and fiscal policies can play a vital role in expansion of private sector credit; which can result in significant growth in taxation revenues. Further he explained that resultant augmented documented formal economy would also result in broad based economic growth and shall simultaneously facilitate in generation of employment opportunities and boosting trade volumes.
Chief Guest of the seminar, Chairman FBR Dr. Muhammad Irshad Khan while addressing the seminar acknowledged the contribution of banking industry in tax revenue and appreciated the initiative of Allied Bank, being first of its kind, pointing towards a multi-dimensional revenue generation potential linked with growth in formal credit to GDP Ratio. He encouraged this initiative and showed his willingness to provide all the support from FBR for enhanced private sector credit; resulting in higher revenue generation and reduction of informal economy.
Other key note speakers, Dr. Ikramul Haq, Huzaima Bokhari and Masoud Naqvi also appreciated this new dimension towards growth of revenue and urged to simplify taxation system, policies and procedures so that trust element between FBR and the tax payers is enhanced and tax payers are incentivized towards formal economy.