Islamabad: Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh on Wednesday said the difference between filer and non-filer is being eliminated and those not becoming filer in 45 days will be given a summons regarding tax as concept of non-filers has been done away with.
He said the government had done away with the distinction between a filer and non-filer because the Federal Board of Revenue (FBR) was developing a system with the help of information technology to do assessment within half an hour after the 45 days requirement if someone would make a transaction to buy a car or property having value of Rs2 million.
Abdul Hafeez Shaikh said at the post budget news conference here that the government was ready to annoy some elites to collect due taxes from them as Pakistan could not afford to default on payment of debt servicing that was going to consume Rs3,000 billion in the fiscal year 2019-20.
He assured the textile sector to put in place Bangladeshi and Chinese models for instant release of refunds for exportersand made it clear that the domestic sale of textile sector to the tune of Rs1,200 billion could not be left without collection of due taxes. “We have estimated that the domestic sale of textile sector stands at Rs1,200 billion out of which Rs6 to 8 billion are being collected on per annum basis,” he said, adding that taxes will have to be paid if someone wants to do business in Pakistan.
Flanked by the whole economic team on the occasion, Dr Hafeez Shaikh said that the IMF’s board was expected to grant approval in few weeks period as Pakistan and the Fund staff had already struck staff-level agreement on fresh package.
To a query on high-powered commission announced by Prime Minister Imran Khan to probe piling up of public debt and liabilities to Rs31,000 billion, Dr Shaikh replied that it would be premature to hold someone responsible for it as the commission would devise its terms of reference (ToRs) to ascertain causes that contributed into hiking the debt at accelerated pace. He said that they were also ready to face accountability as the debt increased in last 10 months, but it went up because of increasing debt servicing requirements on account of already obtained loans in last 10 months. Journalists had raised questions about rising debt from Rs6,000 billion to Rs14,000 billion from 2008 to 2013 when Dr Hafeez Shaikh was himself Minister for Finance during the PPP-led regime from 2010 to 2013. Secondly, the journalists asked him that how much debt burden increased because of hike in policy rate by 500 basis points by the State Bank of Pakistan (SBP) during the last 10 months rule of the PTI-led regime. The adviser said the commission would do its job the way it wants to move ahead before holding anyone responsible.
He said that the government was going ahead with borrowings because it required getting loans to pay back interest payments on obtained loans. “We cannot avoid payment of debt servicing,” he said, and added that the circular debt hiked to Rs1,400 billion and the government would have to clear its slate. Now he said the government was making efforts to bring down increase in circular debt from Rs38 billion to Rs26 billion on monthly basis.
While defending the government’s position, he said that it would be unfair to criticise the incumbent regime for mistakes by the past rulers. He said the public debt and liabilities went up to Rs31,000 billion and the debt servicing was going to consume Rs3,000 billion out of total FBR’s projected collection of Rs5,555 billion for the next budget. He said the provinces’ share of Rs3.2 trillion could not be halted under the Constitution and NFC requirements so the rich and wealthy would have to discharge their national obligation to contribute into national kitty through payment of due taxes honestly. He said the Centre runs into deficit from the very first day by given 60 percent revenue to provinces.
He advised to delink economy from politics and said that the foreign loans touched $100 billion mark while the country’s ability to generate dollars in shape of boosting exports achieved zero growth in last 10 years. The trade gap, he said, had touched $40 billion mark, and added that the government managed $9.2 billion from friendly countries and secured $4.5 billion oil on deferred payments in order to get cushion on external front.
On fiscal front, he said the FBR’s revenue target of Rs5,555 billion was challenging one so the rich would have to pay taxes as Pakistan’s tax to GDP ratio was hovering around 11 percent which was one of the lowest even among the regional countries. He said the FBR’s target of Rs5,555 billion was challenge for him and he opted to accept this challenge for himself but everyone would have to work hard to achieve this desired target. He said that if someone was earning Rs0.1 million per month then the government needs to decide whether it’s fair to treat him like poor or he should contribute making possible for the government to really taking care of vulnerable segments of the society. He said the government allocated Rs152 billion for newly merged tribal districts out of which Rs83 billion would be utilised for development projects.