Urdu point Lahore
Published Date: Jul 19, 2019
Chairman, Federal Board of Revenue (FBR), Shabbar Zaidi Friday said priority of the government to enhance the tax net and expend tax base to documenting the country’s economy.
Taxation is the only way to forward for equitable distribution of wealth, as "we cannot have stabilized and equitable society unless we have a fare taxation system" he said this during a Policy Symposium on Pakistan Economy and IMF Programme: Challenges and Opportunities organized by the Sustainable Development Policy Institute (SDPI), here.
Due to presumptive tax regime, we actually dissociated the taxation from the economy, where taxing the real income was out of question, he lamented.
The incumbent government and the International Monitory Fund (IMF) are on the same page, as there was no disagreement by the government on the measures proposed by the IMF, especially the taxation measure, he said.
He said the government would not bow down against the pressure, protests and lame excuses of the businesses and industries.
Shabbar Zaidi said "we are trying to make Pakistan good for everyone." Over the decades the policies of the successive governments make Pakistan a trading state rather a sami-manufacturing state, where "we are importing everything from mineral water to foods items and never worked-out on import substitution." While raising the concerns over the open transit trade agreement with Afghanistan, he said the agreement was being exploited and abused by the smugglers which negatively impacted the local industry.
Pakistan needed to review this agreement and should take stringent measures to control illicit trade on Pak-Afghan border, he said. There are around 100 thousand companies registered with the government of Pakistan, where only 60 thousands file their returns, which shows the level of tax compliance.
He said the measures taken in the current federal budget would fundamentally change the course of history of Pakistan.
The government was taking steps to redress the institutional corruption through automation of the taxation system, the Chairman FBR said.
Former Finance Minister, Dr. Shamshad Akhtar said stabilization of the economy was very critical for the growth of the country, where one should not looked stabilizations in isolation, rather a step-forward towards economic growth.
She said there is "No gain without pain, and that is what stabilization is based upon which, we will have to face." After the period of stabilization coupled with key structural reforms across the board, the economy will get out of crisis, she added.
The major economic challenge of the country is high consumption, low production and low savings and investments.
The gap is widening between saving and investments, which pushed the country to seek foreign assistance. While talking on IMF programme, Dr Shamshad, IMF polices usually are dynamic which may help Pakistan address fiscal imbalances. Resident Representative, International Monitory Fund (IMF), Pakistan Office, Maria Teresa Daban Sanchez said $6 bn Extended Fund Facility (EFF) programme for Pakistan aim to support the economic reform programme of the country.
She said the programme focused on decisive fiscal consolidation to reduce public debt and build resilience, while expanding social spending.
The programme will help Pakistan reduce economic vulnerabilities and generate sustainable and balanced growth, she added. Moreover, the programme is expected to unlock broader support from multilateral and bilateral creditors in excess of US$ 38 billion, which is crucial for Pakistan to meet its large financing needs in the coming years.
Executive Director SDPI, Dr Abid Qaiyum Suleri said at the very beginning there was lack ownership from the government on the IMF programme, which makes the programme controversial.
He said the letter of intent of the current government to IMF focused on expanding social safety nets to cushion the impact of the needed stabilization policies on the poor, which is positive step.
However, the government needed to strengthen its social protection programmes and should focus on direct taxation to help reduce burden on the vulnerable segment of the society, he added.