United Business Group Outlines Economic Challenges and Calls for Policy Reforms in Pakistan

Karachi, Leaders of the United Business Group (UBG) have articulated significant challenges facing investors in Pakistan, calling for comprehensive governmental reforms to stabilize the economy and foster investment. In discussions with a delegation of businessmen and industrialists, UBG outlined issues such as high taxation, uncertain policies, and energy shortages, which they believe are stifling economic growth and investor confidence.

According to United Business Group, UBG leaders including Patron-in-Chief SM Tanveer, President Zubair Tufail, General Secretary (Sindh) Hanif Gohar, and Core Committee Member Syed Mazhar Ali Nasir highlighted several critical areas needing attention. These include the heavy tax burdens placed on industries and the lack of a coherent industrial policy. Investors are particularly concerned about the high utility tariffs and the taxes on dividends, which have pushed effective tax rates for shareholders up to 68 percent.

The group also noted systemic issues such as prolonged load shedding of power and gas, and the challenges of smuggling, under-invoicing, and misdeclaration of imports which further hinder the economic environment. These factors have led to a reluctance among existing investors to reinvest, and prospective investors to hesitate in committing to the Pakistani market.

To combat these issues, UBG urged the government to support the energy sector by addressing the substantial circular debt and reducing losses in gas and electricity transmission. They also called for a reduction in dependency on imports, the implementation of sustainable tax policies, and the simplification of fiscal regulations to encourage job growth and boost exports.

Additionally, UBG leaders advocated for a separation of fiscal policy from tax collection processes to prevent revenue-seeking behaviors that may hinder long-term economic stability. They recommended phasing out the super tax to reduce the corporate tax burden and suggested lowering the general sales tax to encourage more retailers to participate in the formal economy. Lastly, they stressed the importance of increasing the tax-to-GDP ratio to at least 15 percent by broadening the tax base, emphasizing that the upcoming federal budget for 2024-25 should focus on these issues without imposing additional burdens on current taxpayers.