ISLAMABAD: Minister of State for Revenue Hammad Azhar on Wednesday said the government intended to move ahead with a national tax agency instead of asking taxpayers to file different taxes at federal and provincial levels separately.
He said the informal sector was the major problem and even chains of some formal sectors such as sugar, steel, plastic and others broke at certain stage, so the FBR could not fully collect the due taxes.
“The government will grant autonomy to the FBR as part of long-term agenda after placing ongoing reforms for separating policy from administration. We are going to use technology, integration of data from different avenues including 30 government agencies, separating tax policy from administration for improving administration as tax policy measures had already exhausted through different measures in the past,” Minister of State for Revenues Hammad Azhar said in a conference organised by the SDPI here on Wednesday.
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He further said the PTI government had never tempted to generate revenues for achieving monthly FBR targets through increased rate of taxation on POL products and claimed that the taxes were reduced to the lowest compared to the last 10 years. Sometimes, it lured us but the government took the principled position that it would not hike taxes on POL products. “If we opt this method, we can surpass our monthly collection target,” he told The News after attending a session on revenue mobilization here at the SDPI conference.
Contrary to the claim of Minister for Finance Asad Umar for overcoming the crisis, Minister of State for Revenues argued in his address that Pakistan’s economy was in a crisis mode and made a comparison between 2013 and 2018 and stated that the foreign currency reserves were double than the current account deficit (CAD) in 2013 but now the CAD was double than foreign currency reserves.
Talking about the IMF, he said that irrespective of political cost, the government would undertake all those steps which would be in the interest of the country. “We will ensure transparency into the Ministry of Finance and FBR instead of keeping things secretive,” he added.
Identifying major structural flaws in Pakistan’s economy, he said that whenever the country’s economy grew more than 5 percent of GDP, then the economy struck with major balance of payment crisis by witnessing a hike in twin deficits, including the budget deficit and current account deficit. In the last year of the five-year term, he said that the economy was run irresponsibly, so the next government inherited empty coffers, he maintained.
He said the government was not undertaking austerity by reducing public sector spending for development but it was implementing austerity by cutting down spending on perks and privileges for public representatives.
“Technology offers a ray of hope,” he said and added that the government developed an IT solution to overcome smuggled phones with whopping estimates of Rs110 billion. By netting Rs50 billion, its collection could be doubled than many sectors such as sugar and others, he added.
The PRAL (Pakistan Revenue Automation (Pvt.) Ltd.), he said, would be reformed in days and weeks ahead and added that audit system would be introduced parametric based and taxpayers would not be bothered to visit tax offices any more.
On the occasion, Dr Hamza Malik from UNESCAP said that there was a need to bring a paradigm shift in narrative of ensuring effectiveness of public spending and shifting resources towards achieving goals related to education, health and social protection. When the growth would continuously pick up, then the revenue mobilization would be resolved. He stressed upon the need of introducing fairness in taxation system and recommended to impose taxes on the basis of need of the country instead of on the advice of IMF or any other donor.
WB’s Dr Robert Beyer said on the occasion that the fiscal deficit and public debt were higher in South Asian countries and there was limited room to maneuver. He raised the question that why South Asian countries could not increase tax-to-GDP ratio and wondered whether tax exemptions were contributing towards dismal performance on revenue front or any other factor could be held responsible for it.
(This news/article originally appeared in The News on December 6th, 2018)