Published Date: Jul 20, 2019
Federal Board of Revenue (FBR) Chairman Shabbar Zaidi made it clear that the government would not back down from the condition of producing the national identity card for the purchase of Rs50,000 and stressed the need for paying taxes.
He was addressing the ‘Policy Symposium on Pakistan Economy & IMF Programme: Challenges & Opportunities’ on Friday Zaidi termed taxes the only way forward for an equitable distribution of wealth and the establishment of an equitable society in the country.
“I meet 14-15 delegations every day and everyone says the same thing: ‘please stop charging all these taxes’,” he said. “We must realise that simply giving zakat, charity and donations is not enough… everyone is equally liable to pay taxes.”
He wondered over the opposition to the condition of producing national identity card for the purchase of over Rs50,000. “What is the problem in showing your identity card?” he asked. “Everybody wants identity card condition gone but we cannot accept this demand,” he said.
According to the FBR chief there were around 100,000 companies registered with the government, but only 60,000 file their returns. He said some big companies earned profits up to 25% but “the tragedy is that the tax is not collected on actual income”.
However, he said, the measures taken in the federal budget will fundamentally change this scenario. “We are changing the whole tax system in the budget. We will collect taxes on incomes, rather than items,” he said. “We cannot have equitable society unless we have a fair taxation system.”
He admitted that there were issues but pledged that these would be redressed. He also pointed out that hawala and hundi had damaged the country’s economy. “The government is taking steps to redress the institutional corruption through automation of the taxation system,” he added.
Zaidi said the government and the International Monitory Fund (IMF) were on the same page on all related matters. “There is no disagreement on the measures proposed by the IMF, especially the tax measures,” he told the event, organised by the Sustainable Development Policy Institute (SDPI).
Zaidi said that policies of the previous governments over the past decades made Pakistan a trading state rather a semi-manufacturing state. However, he reiterated resolve of the government that the real income would have to be taxed. “There is no second opinion about it,” he made it clear.
“We are importing everything, from mineral water to foods items, and never worked out on the import substitution. Due to presumptive tax regime, we actually divorced the taxation from the economy where taxing the real income was out of question,” he lamented.
Raising concerns over the open transit trade agreement with Afghanistan, he said the facility was being exploited by smugglers. “Pakistan needs to review this agreement and should take stringent measures to control the illicit trade on the Pakistan-Afghanistan border,” he said.
Speaking on the occasion, former finance minister Dr Shamshad Akhtar, termed stabilisation of the economy very critical for the country’s growth, where “one should not look stabilisations in isolation, rather a step forward towards” the economic growth.
“There is no gain without pain, and that is what stabilisation is based upon that we will have to face,” she said, adding: “After the period of stabilisation coupled with key structural reforms across-the-board, the economy will get out of crisis.”