KARACHI – Federal Board of Revenue (FBR) Chairman Salman Siddiq has stated that the FBR has achieved 49 percent of its target tax collection in the last six months with a shortfall of Rs seven billion being met. However, the country remains mired in a financial crisis with political instability and a stagnant economy with a gloomy foreign and domestic investment outlook.
He went on to say that government borrowing from state bank should be limited and indicated that there was a concerted effort to curtail government borrowing given that there are alternative sources to finance the budget deficit such as the mobilisation of domestic resources.
The FBR chairman was addressing the Karachi business community at a luncheon meeting organised by Karachi Chamber of Commerce and Industries (KCCI), at a local hotel. He said there are no conditions attached by IMF over the reformed GST and other taxes per se. He was forthright in saying that as Pakistan is a member of the international community, the IMF facilitates the countries in need and that there is an obligation with the adherence to rules and regulations.
It was revealed that the net circular debt now stands at Rs 140 billion. In order to deal with the pressing issue, he spoke about the privatisation of those institutes that are not meeting expectations and that include power generation companies as well, which owe around Rs 20 billion in terms of revenue. He went on to say that he believed that Pakistan is at a crossroads and that the FBR is faced with difficult challenges. With foreign funding drying up and the high budget deficit, the government has been forced to undertake extensive borrowing from SBP, he said.
Earlier, KCCI President Saeed Shafiq said that litigation with FBR worth of Rs 100 billion cast doubt on the FBR’s performance and went on to say that there should also be held accountable in terms of tax refund regime. He said that the PACC system of customs should be continued, but valuation procedures in place be improved. Illegal shipping charges by the shipping companies are also very damaging for the business and the FBR should look into this, he added. Afghan Transit Trade Agreement (ATTA) is the loss of Rs 343 billion a year to the national exchequer as more than 6,000 containers are emptied in the country under the agreement every year, which has created a parallel economy in the country, he added. Business Men Group Vice President Haroon Farroqi claimed that small traders are incurring a loss of 82 percent of their revenue due to the disparity in withholding tax regime ranging from 50 to 80 percent. Alternate Dispute Resolution committees were formed some five to six years ago by FBR but they are no longer functional, he added.
Chief Minister Advisor Zubair Motiwala said that taxation policies, low budget targets, and lack of vision are the issues plaguing the FBR, and expressed his personal dismay that only 100,000 individuals in the country are paying tax worth more than Rs 100,000.
The proposed suggestion of converting zero rated sectors into regular regime would not be a wise decision, he said, adding that budget targets of FBR are not optimistic against the huge potential of tax net.
