Federal Minister for Finance and Economic Affairs Dr Abdul Hafeez Shaikh said that the upcoming budget, for the fiscal year 2011-12, will aim for stabilisation of economy, with measures to enhance revenues and to help minimise dependence on external finances. The federal minister was talking to journalists after holding a consultative meeting with Pakistan Business Community with an aim to get inputs and proposals for the budget.
Among others, the meeting was attended by Planning Commission Deputy Chairman Dr Nadeem-ul-Haq, State Bank Governor Dr Shahid H Kardar, Federal Board of Revenue Chairman Salman Siddique and other government officials. The federal minister disclosed that steps to cut the government expenditures, measures to reduce dependence on external finance and job creation would feature in the upcoming budget. Earlier, talking to businessmen, the federal minister said that as many as 0.7 million entities have been identified who could be taxed, adding that his inclusion into the tax net would broaden the tax base and help enhance the tax to GDP ratio for prosperity of the country.
The federal minister said that the overall economy was in very bad condition when the current government took over in 2008, adding that there have been challenges of low growth momentum, external shocks, reduced foreign exchange reserves and depreciation of currency value.
Besides, he stated that overspending in the past had propelled the government to opt for harsh measures, besides going to the International Monetary Fund for meeting its expenditures.
He said that last year’s floods and oil prices have impacted the economy and the government was faced with challenges to stabilise the economy, which he said was pre-requisite for all developments. He said that the private sector should be given its desired place and importance to help increase growth. He further said that this sector has been facing exclusion due to public sector dominance.
Shaikh said that government was engaged with all segments of business and corporate sector to devise a mechanism, whereby it could seek new avenues for the generation of income and facilitate the business community for further investment. To a question regarding agriculture tax, the federal minister said that he himself believes that all incomes irrespective of the sources must be taxed; however he maintained that agriculture tax was a provincial subject under the constitution.
On the refund issue, the federal minister said that FBR, since September 2010 to April 18, 2011, cleared 40,000 refund cheques amounting to Rs 31.3 billion, which he said exhibited an increase of 300 percent over the refunds in the corresponding period of last year. The business representative, on the occasion, suggested various tax measures of their related fields. They said that the upcoming budget should be business friendly and also highlighted the importance of enhancing PSDP for infrastructure development to help generate economic activities.
They suggested mitigation of losses of State Owned Entities (SOEs), besides overcoming energy shortage to help industrial growth. The business community supported documentation of economy and implementation of reformed General Sales Tax (GST), however the tax judicial system should be separated from the over all revenue system to make the collection smooth and transparent. They believed that the government should not issue separate National Tax Numbers (NTNs), instead the National Identity Card number should serve for this purpose.
He maintained that this would help broaden the tax base.
