Government Tax Policy Decreasing Number of Entrepreneurs for Government projects  

Pakistan’s economy is going slow in making shifts towards cash saving opposite to taxation policy of government. Experts are categorizing this as a structural change that will result into high inflation and will also bring low economic productivity.

The growth in banking sector deposits are far lower than the previous deposits, during fiscal year 2015 – 2016. While the circulation in currency is increased with immense pace. The authorities form Monetary Policy Committee (MPC) revealed in last meeting session.

According to this declaration we came to know that, in fiscal year pf 2015 – 2016 the currency in circulation boosted 30.5% as compared of 17.3 % which was recorded in previous to this. This expansion shows that emergence of private businesses is increasing rapidly. People are afraid of investing in government projects due to heavy taxations and declaration of assets.


In the last financial year, the federal govt enforced a 0.6% retaining tax on all financial dealings worth over Rs50,000 carried out by non-filers of income tax profits in a single day, targeted at increasing income collection but without examining its effects on the economic system. After demonstrations, the federal govt reduced the interest amount to 0.4%, but people still remain more dependent on cash.

The MPC mentioned that factors adding to this pattern include “low amount of come back on remains and imposition of retaining tax on financial transactions”.

The growing dependency on cash may hole worldwide initiatives, supported by the United Empire, to improve financial addition in Pakistan, which remains one of the cheapest in the world particularly among women.

The low come back on remains due to preferential environment somehow affected the remains but the real damage was done by the government’s decision to encourage the retaining tax. This will increase in cash flow would lead to high rising prices and financial institutions would face problems in loaning cash to the individual industry for development.

The forex in circulation-to-deposits amount, which was 29.3% two years ago, improved to 35.1% a last season, according to the International Financial Finance (IMF) report. This amount further improved to 37.1% as of Sept 9, underscoring the economy’s constant move towards cash.

The MPC mentioned that increase remains were just 8.7% in the last financial season as in comparison to 12% in financial season 2015. However, the remains of personal industry companies increased by only 1.2% in the last financial season, which is considerably low as in comparison to 9.4% in financial season 2015, according to the MPC. This decrease in the remains of personal industry companies has lead in the destruction of the forex in flow to GDP amount from 9.3% to 11.3% in just one year.

Post Author: Farrukh Saeed

Leave a Reply

Your email address will not be published. Required fields are marked *