Pakistan Economy: Pre-Budget Survey

1. SDPISustainable Development Policy Institute
Factsheet on Pre-budget Survey on Economic Reforms
18th
April 2014
Household Survey Results
Taxation
• 68% think that income tax system in Pakistan is neither fair nor transparent. It
burdens existing tax payers
• 65% think that agriculture and services sectors largely go untaxed. New sectors
should be brought under the tax net
• 47% think that filing of income tax returns is a complex and cumbersome process
• 57% think that agriculture incomes from medium and large farms should be taxed
• 71% think that rates of GST are too high and not responsive to slowdown in
economic growth or hike in inflation
• 67% say that food items and medicines should be exempt from GST
• 45% respondents think that full-VAT will be a better option than GST in VAT mode
• 50% who never gets receipts from local grocery store in turn giving rise to
undocumented consumption
• 91% think that tax payer’s money is not effectively utilized by the government
• 51% think that corruption in the tax administration is the main reason of low tax
collection in Pakistan
• 25% are willing to pay 10% additional taxes if the collected amount was invested in
their area
Energy Sector
• 51% feel that the single most important step to overcome the energy crisis in
Pakistan is to reduce electricity theft
• 29% feel that Government's single most important priority in energy sector for
short term should be keeping electricity prices low
• 78% say that their level of energy consumption is not sufficient for their daily needs
• 53% feel that electricity prices are too high for their household budget
• 71% have reduced the amount of electricity used in their home in the wake of
increase in electricity prices
• 65% think that gas supplies should be diverted to producing electricity and save
industry/industrial jobs. Government should reduce the gas supply to transport
(CNG)
• 42% have noticed instances of electricity theft in their local area
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2. SDPISustainable Development Policy Institute
• 41% said that the government must undertake advocacy and outreach campaigns to
encourage people to conserve energy
Business Sector (Formal)
Taxation
• 66% feel that tax administration is not competent and are not trained in
business-friendly tax facilitation
• 84% firms favor further trade liberalization with India and trade promotion with
Afghanistan
• 81% firms are of the view that corporate taxes are not applied fairly
• 77% have never filed their grievances with FBR fearing that doing so may invite
unnecessary intrusion and harassment
• 70% of firms have to seek help in filing their tax returns. They view the process
complex and cumbersome
• 66% firms who think that corruption in the tax administration is the single most
important reason for low tax collection
• 31% firms have given informal payments (bribes) to tax officials
• 74% firms think that rates of corporate taxes are too high in Pakistan
• 48% firms will prefer full-VAT over GST in VAT mode
• 76% firms say that GST rates are too high in Pakistan
• 49% are in favor of expansion of GST through inclusion of most services sectors
Energy Sector
• 27% think that government’s single most important priority in improving
business climate for private sector should be overcoming energy crisis
• 37% firms are willing to pay 10% extra bill if the number of hours electricity
available are increased
• 75% firms who feel that available electricity is not adequate for their current
output levels
• 30% firms feel that available gas is not adequate for their current output levels
• 58% firms will continue to use same level of electricity and pay extra amount if
the prices increase. They will however have to cut back on other budget heads
• 42% businesses will cope with the electricity shortage by purchasing and
maintaining oil and gas-run generators
• 35% firms had knowledge of electricity theft
• 47% firms say that government’s prime focus should be to reduce electricity
theft
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3. SDPISustainable Development Policy Institute
• 67% recommend that priority for provision of gas should be given to industrial
sector for securing jobs
• 58% feel that Chambers of Commerce and other business associations should
play a role in contributing towards energy conservation
Business Sector (Informal)
Taxation
• 57% say that no incentive scheme by the government will persuade them to
register with tax authorities
• 41% entities view informal segment of the economy to be more profitable in
future
• 50% say that maintaining transaction records/receipts is not necessary and
leads to resource wastage
• 69% view firm registration as a difficult, expensive and cumbersome process
• 64% feel that tax rates for their business are very high and registering with the
tax authorities will mean bearing burden of taxes
• 52% think that businesses registered with tax authorities are subject to frequent
audits
• 62% think that engaging accountants to help file taxes is expensive
• 83% say that tax authorities are not helpful and their dealing with registered
businesses is unfair
• 75% think that information on tax compliance is not easy available
Energy Sector
• 37% will pay the additional 10% bill if the number of hours electricity is
available are increased
• 41% have information on instances of electricity theft in their vicinity
Link to Complete Reports:
http://www.sdpi.org/research_programme/researchproject-249-26-60.html
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