Relief not possible in current situation, businessmen told

LAHORE: Federal Finance Minister Muhammad Aurangzeb told businessmen on Saturday that despite realizing the issues faced by businesses in Pakistan, keeping in view the ground realities, it was not possible to provide them any relief from the recent budget measures.

Addressing the business community at the FPCCI Lahore, he said the government was starved of finances and at a tax-to-GDP ratio of 9.5 percent, we cannot expect to move up, adding the government intends to increase the tax-to-GDP ratio to 13 percent in the next two years.

The finance minister conceded that not receiving perks or salaries by the ministers was not enough, we have two reduce our expenses, close unnecessary government departments and privatise the bleeding state-owned entities. He said to increase revenues, we will have to introduce transparent reforms where every segment of the society is taxed equally on the same income, adding that resistance to reforms would be tackled prudently.

He said the government was tackling numerous issues realising well that high markup was an impediment for investors. However, he stressed this issue relates to the State Bank of Pakistan and its monetary committee reviews the situation periodically. He said the current low inflation level has created a cushion and the central bank would act accordingly in its next monetary policy review.

The finance minister made it clear that many traders have registered under the new scheme and all traders would have to pay their tax dues according to the rates fixed by the Federal Board of Revenue (FBR). He said the power rates cannot be reduced immediately, adding that there are various reforms and restructuring needed in the power sector, including renegotiations with IPPs, some which was done by the last PTI government.

He said transparent private sector boards of power distribution companies are in the offing. After their formation, power distribution would be handed either to the private sector or operated through public-private partnership. The government, he added, has great respect for domestic investors and they will be facilitated by systematically reducing their costs.

Aurangzeb said the foreign exchange reserves have crossed $9 billion mark but we are looking for higher reserves. “Foreign donors have slowly started providing soft loans. We are expecting an IMF programme very soon.” He said reforms in the FBR are on and restructuring of the department was being done on priority.

The finance minister said the government will prefer foreign direct investment, and soon the nation will hear good news in this regard. Agriculture is another priority that, once streamlined, would take the economy to the next level, he added.

The businessmen assured the minister of their cooperation but repeated their demand of reducing the tax burden, and instead of increasing taxes, the government should force tax evaders to come into the tax net.