Jamaat-e-Islami (JI) has proposed 23 measures that it says can create fiscal space of up to Rs. 3.102 trillion annually, urging the government to pursue spending, energy and tax reforms instead of increasing the petroleum levy on consumers.
The proposals include changes to petroleum pricing, refinery policy, government expenditure, power sector agreements, monetary policy and tax collection.
JI estimates that changing the import parity pricing mechanism for locally produced petroleum products could save up to Rs. 120 billion a year.
It has also recommended importing crude oil and processing it domestically instead of relying on imported finished petroleum products. According to the party, expanding local refining of imported crude could generate annual savings of up to Rs. 185 billion.
The party has called for an independent audit of upgrade fees and other charges paid to refineries. It has argued that consumers should not be made to bear additional costs for refinery upgrades.
JI has also proposed substantial cuts in federal spending, including the removal of unnecessary expenditures and the transfer of certain functions to provincial governments. It estimates that these measures could save up to Rs. 949 billion annually.
The party has suggested reducing the federal Public Sector Development Programme from Rs. 1 trillion to Rs. 800 billion and removing projects that duplicate provincial initiatives.
In the monetary sector, JI has proposed raising the State Bank of Pakistan’s cash reserve requirement to 15 percent, estimating annual savings of around Rs. 448 billion. It has also recommended cutting the policy rate from 11.5 percent to 9 percent, which it estimates could reduce interest-related expenditure by about Rs. 100 billion.
For the power sector, JI has called for an audit of outstanding Independent Power Producer agreements and renegotiation of costly terms. It estimates that changes to these agreements could save up to Rs. 400 billion annually.
On taxation, the party has urged the government to focus on closing the Federal Board of Revenue’s tax gap rather than relying on higher petroleum levies. It estimates that eliminating the gap could generate up to Rs. 3.4 trillion in additional revenue.
JI has also proposed withdrawing tax exemptions other than those for food, health, education and defense. It estimates that this step could generate an additional Rs. 250-350 billion each year.
The proposals also include implementing reforms identified by the World Bank, which JI says could provide federal savings of up to Rs. 1.1 trillion annually, along with cuts in non-development and luxury spending.
JI said the government should use these measures to generate additional fiscal space and reduce the impact of petroleum taxation on consumers rather than imposing further levy-related costs on the public.
