Pakistan Business Council (PBC) in a report suggested discontinuation of the highest denomination banknote of Rs5000 in order to formalize the country’s economy.
It said that Pakistan’s Tax to GDP ratio will remain more or less at the current rate as will its ability to invest in human capital – health and education, unless there is political will and capacity/capability in the enforcement machinery to formalize the economy and broaden the tax base.
Chasing existing tax payers for more, whilst allowing the informal sector to grow, is akin to killing the goose that lays the golden eggs.
With nearly a third of money in circulation outside the banking system, 80 per cent of the population unbanked and 60 per cent (80 Million people) not included in any financially transparent system, creating the opportunities for financial inclusion, concurrent with disincentives for the use of cash should be major thrusts.
