A committee consisting of experts, the Economic Advisory Council (EAC) on Saturday advised the government to engage with the provincial governments to discuss revenue mobilization efforts at the provincial level to increase the annual revenue generation.
The advice was give at the meeting of EAC chaired by Finance Minister Dr. Abdul Hafeez and attended by Convener EAC Dr. Hafiz A.Pasha, Deputy Chairman, Planning Commission Shahnaz Wazir Ali, Dr. Shamshad Akhtar, Nasim Beg, Bashir Ali Mohommad, Dr. Aisha Ghaus Pasha, Dr. Ijaz Nabi, Ali Habib, Ali Jameel, Arshad Zuberi, Farid Rehman and Shoaib Sultan Khan.
The advice has gained importance as all the federal government efforts to increase the tax to GDP ratio from below 9 percent to 12 percent have failed during the last four years in office. The reason being the low tax collection from services, agriculture and real estate that fall under provincial jurisdiction. The powerful lobby of feudal has successfully thwarted any attempt to tax the agriculture income. Without including new areas in the tax net the government is not likely to come out of low revenue collection circles leading to debt crisis.
The meeting also discussed proposals for Budget 2012-13 and assist in the formulation of economic policies for the next year. Economic Affairs Division gave a presentation on ‘Disbursement of Foreign Assistance 2011-12’. Operational budgetary proposals were presented by respective sub-committees of EAC in areas of industrial and agriculture sectors including textile policy, capital markets and balance of payments. The sub-committees on social sector and fiscal coordination gave preliminary inputs with detailed presentation to be given in the next meeting of EAC. The EAC asked Deputy Chairman Planning Commission to present a strategy on tariff rationalization, FBR to present a strategic perspective on tax reforms, Chairman SECP to present a strategy for development of capital markets and Ijaz Nabi to give a strategic view of Indo-Pak trade in the next meeting. It was decided that along all other sub-committees will present
their more detailed proposals for the Budget 2012-13 in the next meeting of the EAC after engagement with the key stakeholders. Addressing a national enforcement dialogue on tax evasion on Friday, the Finance Minister said the culture of tax evasion was a serious issue and the government is taking concrete steps to control this menace. He said that tax evasion is causing revenue shortfall in the country and thus hampering national development and public welfare projects and dependence on foreign loans is increasing due to this undesirable practice. He highlighted the weak regulatory mechanism is one of the reasons for tax evasion as it encourages tax evaders resulting in ever increasing number of people and organizations starting getting involved in tax evasion.
Speaking on the occasion, Chairman FBR Mumtaz Haider Rizvi rejected the impression of non-existence of effective tax mechanism in the country. He said that the issue of tax evasion in the cigarette industry is of very serious nature and is caused by non-compliance to the legal framework. He said that FBR has established a dedicated cell in Peshawar which is doing all efforts to check production and distribution of illegal cigarettes as well as entry of smuggled cigarettes into the country which is evident from recent successful raids in KPK and Sindh. He said that introduction of special audit system to check suspicious tax evasion has helped a lot in countering tax evasion.
