Black economy of Pakistan and its remedy
THE black economy of Pakistan is a topic that has been a matter of concern for the Pakistani government, Pakistani citizens, and international financial institutions alike. The black economy encompasses a range of illegal activities, including corruption, tax evasion, money laundering, and the underground and hidden economic activities from the eyes of the government. The black economy of Pakistan is estimated to be worth voluminous billions of US dollars. According to rough surveys conducted by many organizations and experts, Pakistan’s black economy is reaching up to one trillion of US dollars per annum. On the other hand government calculations transpires that gross domestic product in current prices in Pakistan increased by 28.3 billion US dollars (+8.13 percent) in 2022 in comparison to the previous year.
With 376.49 billion US dollars and it has a significant impact on the country’s economic growth. One of the main issues with the black economy of Pakistan is that it deprives the government of much-needed revenue. The government of Pakistan relies heavily on taxes to fund its public services, including healthcare, education, and infrastructure. Foreign remittances and export’s generated revenue normally is being used for balance of trade and international payments. However, the black economy of Pakistan means that many businesses and individuals are not paying their fair share of taxes and money laundering which results in a shortfall in government revenue.
This can be easily visible and witnessed when one visit any shopping mall, amusement park or restaurant at any occasion or weekends. Public is enjoying their lives and busy in their daily routine life. Recent fuel price hike and inflation has a negative impact on their purchasing power but rumours of default or default risk have no significant impact on the lives of Pakistanis. This shows that there is something hidden under the economy that people are not afraid of risk of default of their country. It may also be the reason for that they have lack of awareness about the consequences of default of their country.
Another issue with the black economy of Pakistan is that it creates a culture of corruption and corrupt practices. When individuals and businesses are not paying their taxes, they are more likely to engage in corrupt practices to evade taxes or to gain an unfair advantage in every situation. This culture of corruption can make it difficult for honest businesses to compete, which can stifle economic growth and development of Pakistan.
One of the most noteworthy challenges in combating the black economy of Pakistan is the lack of accountability and transparency. Many businesses and individuals engage in illegal activities, such as tax evasion and money laundering, because they know that they can get away with it. The government needs to take a more proactive approach to combating the black economy by increasing transparency and accountability through law enforcement agencies nationally and internationally.
The black economy of Pakistan is a significant challenge that needs to be addressed. The government needs to take a more proactive approach to combating the black economy by increasing transparency and accountability, increasing public awareness of the negative impact of the black economy, and increasing enforcement efforts. By taking these steps, the government can help to create a more transparent and accountable society, which can lead to increased economic growth and development for all citizens of Pakistan.
The black economy of Pakistan is a major issue faced by the country. This has resulted in a loss of revenue for the government, as well as creating an uneven playing field for businesses that operate within the legal system. The remedy for this issue is complex and requires a multi-faceted approach. The government needs to increase its efforts to combat corruption. Corruption is a major contributor to the black economy, and it is important to root out corrupt officials who facilitate illegal activities. This can be done by strengthening institutions such as the National Accountability Bureau, and by increasing the resources available to them.
Secondly, the government needs to improve the tax system. The tax system in Pakistan is complex and difficult to navigate, which has resulted in many individuals and businesses avoiding taxes altogether. The government should simplify the tax system and make it easier for individuals and businesses to comply with their tax obligations. This will increase revenue for the government, as well as create a level playing field for businesses that operate within the legal system.
Thirdly, the government needs to provide better incentives for businesses to operate within the legal system. This can be done by reducing the regulatory burden on businesses, and by providing tax incentives for those that comply with the law. This will encourage businesses to operate within the legal system, and will reduce the incentive for them to engage in illegal activities.
Fourthly, the government needs to invest in education and training programs. Many individuals who engage in illegal activities do so because they lack the skills and knowledge necessary to earn a living within the legal system. By investing in education and training programs, the government can provide individuals with the skills and knowledge they need to earn a living within the legal system.
Finally, the government needs to improve its social safety net. Many individuals who engage in illegal activities do so because they lack access to basic necessities such as food, shelter, and healthcare. By improving the social safety net, the government can provide these individuals with the support they need to earn a living within the legal system.
The black economy of Pakistan is a major issue that requires a multi-faceted approach to remedy. The government needs to combat corruption, improve the tax system, provide better incentives for businesses to operate within the legal system, invest in education and training programs, and improve its social safety net. By taking these steps, the government can reduce the size of the black economy, increase revenue, and create a level playing field for businesses that operate within the legal system.
—The writer is Editor-in-Chief, Inverge Journal of Social Sciences (IJSS), Islamabad.
Email: dr.asifmails@gmail.com
