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Recorder Report

Business Recorder

Published Date: Apr 3, 2019

Government ‘consciously’ allowed decline in tax collection on imports: Azhar

The government has stated that it was a conscious policy decision to allow decline in tax collection on imports, which resulted in 3 percent growth in revenue this year as compared to the last fiscal year.
About 40 percent revenue comes from import stage and the government consciously decided about import compression and removed taxes that were stifling commerce and businesses despite tight fiscal constraints, said Minister of State for Revenue Hammad Azhar while speaking at the pre-budget seminar and launch of Hafeez Pasha’s book namely ‘Growth and Inequality in Pakistan.’
The minister regretted that there has been no debate on the necessity of stabilisation and focus is on adverse effects of it. The government, he said, has been rescuing the economy from the mess created by its predecessor, Pakistan Muslim League (Nawaz) government. The gravity of the economic situation was reflected through three-time higher current account deficit as well as higher fiscal deficit left by the previous government.
The minister said that the lowest growth period was overstated by the Statistics Division under the instructions of Finance Ministry and therefore the federal cabinet has decided that Statistics Division will no longer be under the administrative control of Ministry of Finance and will be placed under the Ministry for Planning primarily because Finance Ministry and Statistics Division have been allegedly involved in data manipulation.
The minister said that Pakistan’s tax system is most complicated and the country has been suffering from low tax to GDP ratio on the face of claims by all governments to double the tax collection. The factual position is that tax collection has been increased in absolute terms primarily because of high inflation and massive imports but there was no growth in tax to GDP ratio. The federal government has started discussion with the provinces to get their provincial authorities together to increase tax to GDP ratio which cannot improve unless provincial tax collections improve significantly.
The present government, he stated, separated tax policy from administration. He stated that there was 3 percent growth in revenue this year and in fact the Federal Board of Revenue (FBR) has missed the target in last nine years out of ten years. The minister added that 70 percent of the taxes are composed of withholding tax and there is a need to get rid of them.
The current deficit is decreasing and trade deficit is narrowing, which indicate that things are improving and the government will unroll operation against tax evaders on the basis of their living style by the end of this month.Source: