We, the academia, and business community leaders of Pakistan, have deliberated on the economic crisis in our beloved homeland. The sustainability of private individuals, firms and families are under threat from the irresponsible management of our collective economic resources.
Political, bureaucratic, and judicial interference in economic institutions has eroded the prosperity of the national economy, and left the middle and poor classes marginalized, businesses uncertain and the government on the brink of bankruptcy. Unprecedented inflation, high unemployment, brain drain, shortages of essential resources, and an ever-weakening PKR have made ordinary citizens vulnerable to economic shocks.
Drawing lessons from history, we must realize that undue state interference is greatly damaging to a prosperous economy. Political involvement adversely damages relationships that are critical for a healthy economy.
We take exception to the vilification campaign against private individuals and entities engaged in commerce, and instead hold cronyism and special interests responsible for the economic losses to the country.
The constitution of Pakistan lays out fundamental economic rights. These rights are the core principles on which our economy is built. They include:
1. FREEDOM OF MOVEMENT 2. FREEDOM OF TRADE, BUSINESS OR PROFESSION 3. PROTECTION OF PROPERTY RIGHTS
Principle of Policy: The Promotion of Economic Well-being of the People
We are calling upon the sincere politicians, business persons, and bureaucrats of Pakistan to join hands to save our Motherland from the clutches of economic deprivation. We call upon them to defend their fundamental economic rights to make a democratic, federal, modern, and progressive Pakistan, as dreamt by the Founder of the nation, possible. Accordingly, we adopt the following “Charter of Economy”.
Fair Taxation
01. A single rate of income tax, harmonized general sales tax and customs duty, set at an optimal revenue collection level, will be levied. No other taxes are to be levied on a permanent basis and any urgent fiscal needs such as natural disasters or war will be addressed by creation of funds.
02. The government will withdraw all exemptions from income tax, sales tax, and customs dutyexcept for pension income below a threshold.
03. The government will withdraw all SROs and exemptions, except on the sensitive items, such as medicines and books or items related with climate change adaptation.
04. The Parliament will make a constitutional amendment to bring the agricultural income under the federal government.
05. The government will not give tax concessions, tax holidays or tax credits to any specific industries or investors or private individuals except in cases where government has entered contractual obligations.
06. All kinds of withholding taxes, except payroll, dividends and payments to non-residents will be discontinued. Indirect taxes on utilities will be withdrawn.
07. The government will not provide subsidies to the public or firms, unless in the case of a national emergency approved by a two third majority of Parliament.
08. The government will stop all kinds of concessionary financing and discrimination between businesses through fiscal incentives.
Spending Restraint
09. Following the 18th Amendment, the government will close down federal departments and ministries that are responsible for any functions that have been devolved to provincial governments.
10.The federal and provincial governments will not allocate fiscal resources for new development projects for at least five years and will allocate all development funding to complete or fast track on-going projects to minimize throw-forward, and to reduce cost-escalation on on-going projects. Climate and environmental priorities will be given special consideration. The government will prioritize the use of public private partnershipsto finance development projects.
11. The government will stop the practice of provision of free petrol, free electricity, and free or subsidized plots to public officials and public representatives.
12. The government will keep the fiscal deficit as a percentage of GDP under the maximum level of -3% and will keep primary deficit to 0%.
13. There will be no increase in tax rates, but rather cuts in government spending, to reduce the fiscal deficit.
14. The government will reform pensions funds management so that direct fiscal allocation for pensions will be gradually eliminated and pensioners may enjoy the savings by setting up special purpose vehicles.
15. Any borrowing to cover the budget deficit will not be authorized to finance any new spending, but only to fund existing obligations.
Budgeting
16. The finance minister will announce outputs and outcomes achieved by budgetary allocations for each budget to ensure transparency and will make audit reports available.
Social Protection
17. The government will use the method of Negative Income Tax, by targeting those households that are earning below the income tax threshold, by imposing a Negative Income Tax Rate. The Negative Income Tax Rate will be decided by a simple majority vote of Parliament.
Free Markets, Trade & Price Controls
18. The government will not intervene to set prices of commodities.
Private Property
19. The government will solicit bids for privatization of State-Owned Enterprises (SOEs) both inside and outside the country through an internationally recognized competitive privatization process including employees’ ownership option.
20.Public land will not be allowed to be wasted at any given time. Obscurity of property ownership will be eliminated by individuating communal land rights and apportioning public lands through corporatization. State lands, lying unproductive or occupied by state elites, shall be leased out for industrial, business, and commercial ventures.
National Tax Agency
21. A National Tax Agency (NTA) with the mandate to impose a simple and harmonized tax code will be established and will replace/restructure Federal Board of Revenue (FBR) and all other federal tax authorities in the country. It will be responsible for collecting taxes at the federal level with active role of National Tax Council (NTC). Provincial tax authorities will be similarly structured and streamlined to provide ease and simplicity to the taxpayer. The NTA will report to the Parliament through the Minister of Finance and the appointment of chairman and members shall be through a public hearing by a joint select committee of the National Assembly and the Senate. It will not assume the role of legislator and policymaker, which under the constitution is the sole prerogative of the people of Pakistan through their elected representatives.
22. A Taxpayers' Bill of Rights will be promulgated by the Parliament.
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