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ISLAMABAD: Fiscal deficits and lack of revenues generation are the biggest problems facing with Pakistan's economy and the introduction of measures like Reformed General Sales Tax (RGST) are vital for the growth of national economy, an economic expert said.
“RGST is only a value added tax which would not increase any burden of taxation on any sector”, Dr. Rashid Amjad an economists and Vice Chancellor of Pakistan Institute of Development Economics (PIDE) told APP here on Tuesday.
He said that the main objective of such taxation was to increase the documentation of the economy by offering incentives to producers and service providers by allowing them to have their paid refunds.
The government, he said has already announced that now new tax would put on the essential items which affect the common man.
Dr. Amjad observed that there should not be any direct inflationary impact except marginally on these services/producers which were not paying taxes before.
However, he said that government has to be extremely vigilant to ensure that producers do not use this as an excuse for increasing the prices.
“Also there is need of prudent monetary policy such that introduction of RGST does no increase the inflationary expectations”, her remarked.
“I think for everybody it is difficult to introduce reforms measures when economy is in downturn but we have to take painful decision to regain macro stability which is vital for ensuring private sector revival and growth in the economy”, he said.
