Hafeez sheds light on PTI gambit to increase tax base

By News Desk

ISLAMABAD: The Prime Minister’s adviser on finance, Hafeez Sheikh, has said the government has done away with the concept of “non-filers” as he insisted there is a “clear roadmap” to generate the daunting Rs5.55 trillion in revenues it set out in its federal budget.

“In order to remove the misconception that non-filers can go scot-free by just paying higher tax and also to remove certain anomalies, the concept of ‘non-filer’ is being done away with and a scheme has been introduced which will force non-filers to become filers, hence it will help enhance the number of tax filers,” Sheikh said, during the post-budget news conference on Wednesday.

The government, he said, had also made the process of filing returns “automated and easy”, so a person could become a filer “within just six minutes” by registering on FBR’s website.

Sheikh was flanked by Federal Minister for Planning, Development and Reform Khusro Bakhtiar, Power Minister Omar Ayub Khan, Minister of State for Revenue Hammad Azhar, Federal Board of Revenue (FBR) Chairman Syed Shabbar Zaidi and other top officials of the finance ministry.

Sheikh sought to quell exporters’ concerns by saying the zero-rating of exports will remain intact. “However, the exporters who sell their commodities inside the country will be taxed for domestic sales,” he said.

He told reporters that there are around Rs1.2 trillion in domestic textile sales, but just Rs6 billion to Rs8 billion in taxes are collected, “which is unacceptable”. He urged the sector “to perform its national duty” and pay due taxes for the overall uplift of the national economy.

Similarly, the PM’s aide said sales tax on different products would be collected at the manufacturing stage, which would help the government boost revenue collections.

Explaining another tax measure, Sheikh said the government would not charge any customs duty on the import of raw material that was not being produced inside the country, adding that duties had been enhanced by 4 per cent on certain luxury items to curtail imports.

Sheikh said despite financial constraints, the government did not slash funding of public interest programmes and even doubled allocations for projects under the Public Sector Development Programme (PSDP).

He said different initiatives, including the Ehsaas programme, Sehat Sahulat Program, low-cost housing and subsidy on electricity for consumers using less than 300 units of electricity had been launched to protect the vulnerable, for which the government had earmarked Rs216 billion in the budget.

The adviser said the development budget had been enhanced to Rs951 billion, which would be used to build dams and other important projects.

Moreover, he said, a special focus is being given to poverty-hit areas, particularly in Balochistan and the merged districts of the erstwhile Federally Administered Tribal Areas (Fata) with Khyber Pakhtunkhwa, and substantial allocations have been made for various development projects there.

He said this was the first budget of the Pakistan Tehreek-e-Insaf (PTI) government, which has been prepared at a time when the country is facing a “difficult economic situation”. “When the incumbent government took over, the economy was in critical condition with debt liabilities of around Rs31 trillion.”

He said against a revenue collection of around Rs4 trillion, the country had to spend Rs2 trillion on debt-servicing, while exports did not grow during the past five years — resulting in a trade deficit of around $40 billion.

Sheikh said the government had to earmark Rs2.9 trillion to pay mark-up on national debt during the fiscal year 2019-20. “It is even higher than the total expenditures of civil and armed forces’ combined outlays, and is more than half of the total tax revenues for which the target of Rs5.5 trillion had been fixed for the fiscal year 2019-20.”

He said it is unfair that whenever the current government has to take loans to pay back loans taken by the preceding governments, the opposition starts criticising it. “We have to learn to criticise only on the basis of reality, not for the sake of mere criticism and politics,” he said.

He added: “If any person thinks that the borrowings of the current government are misused, then we are totally answerable to [them] and will provide any detail in this regard. Debts are a reality and we cannot ignore this reality.”

However, he assured Pakistanis that all the new loans would be utilised “only to pay back the previous loans”.