–Finance adviser says people are facing difficulties in declaring assets, hence the extension
–Warns Benami commission will come into action after expiry of deadline
–Says budget is all about managing the external front, strict austerity, helping the poor/social welfare, helping industrialists and mobilising revenues
–Hammad says amnesty scheme received positive response, govt will update details in few days
ISLAMABAD: A day after Federal Board of Revenue (FBR) Chairman Shabbar Zaidi rejected speculation in the media regarding an extension in the deadline for the government’s Asset Declaration Scheme, Adviser to Prime Minister on Finance Dr Hafeez Shaikh on Sunday announced that the government is extending the deadline till July 3.
He said this while addressing a joint press conference with Minister of State for Revenue Hammad Azhar, Special Assistant to Prime Minister on Information and Broadcasting Dr Firdous Ashiq Awan and the FBR chairman himself.
“There’s been a lot of interest in the Asset Declaration Scheme,” he said, adding that the deadline had been extended to banking office hours on July 3.
“We decided to extend the deadline as there has been a lot of interest in the Asset Declaration Scheme. We are giving people a final opportunity in case as some of them are still in the process or are facing difficulties wrapping it up,” Shaikh said. “After that, the benami commission that we are currently establishing to pursue benami properties, will come into action,” he added.
Addressing the media, Hammad said that thousands of people had availed the scheme so far. “We will put forth the details of this scheme in a few days,” he added.
Shaikh, while discussing the government’s budget strategy, hoped that the International Monetary Fund (IMF) board would approve $6 billion extended fund facility for Pakistan. He said that Pakistan would also get $3.4 billion from the Asian Development Bank (ADB), $2.1 billion of which was expected during the upcoming fiscal year (2019-20) while the country was also hopeful for assistance from the World Bank (WB).
He said that since the external loans were provided on low interest rates comparatively, so they were cost-effective and did not create much trouble in repayments.
The adviser enumerated five key areas that had been focus of the budget for the fiscal year 2019-20. Those included overcoming the external threat (current account deficit and trade deficit), taking austerity measures, protecting the vulnerable segments of society, protecting the interest of industrialists to help economic growth and mobilise revenue (Rs5.5 trillion).
He said that the economy was facing crisis situation when the incumbent government took over, adding that it had to face many challenges on external front in terms of current account deficit, trade deficit, and debts to the tune of Rs31,000 billion, including foreign loans of $100 billion.
“In order to overcome the situation, tariff on imports, particularly luxury goods, was increased and same policy was carried out in the upcoming budget,” he said, adding that reluctantly, the current account deficit had reduced from $20 billion to $13.5 billion.
He said that the current account deficit would further be reduced to $7.5 billion during the upcoming year.
The adviser said that to overcome the economic challenges, the government mobilised about $9.2 billion in cash from China, Saudi Arabia and the United Arab Emirates (UAE). “In addition, the $3.2 billion deferred payments facility agreement was signed with Saudi Arabia for oil imports and an agreement of $3 billion was also signed with Qatar, out of which $500 billion had been transferred,” he added.
The government, he said, also took austerity measures to reduce its expenditures.
He clarified that the government had to meet some compulsory expenditures as it had to spend Rs2.9 trillion on debt repayment while 52 per cent of the revenue would be transferred to the provinces under the Constitution while it was also bound to spend for the vulnerable segments.
“However, the government still reduced the expenditures by Rs50 billion and did not increase the pays of government employees (1-16 grade) beyond 10 per cent, and that of 17-20 grade employees by 5 per cent and no raise for grade 20 and above employees,” he said, adding that the allowances of cabinet members had been cut by 10 per cent, while the budget for PM House was also reduced.
The adviser said that the funding for social protection programmes had been almost doubled from Rs100 billion to Rs191 billion.
He said that in order to protect common people, the government had allocated Rs216 billion for providing subsidy to the consumers utilising up to 300 electricity units while the neglected areas like the erstwhile Federally Administered Tribal Areas (FATA) had been given special heed in the budget with allocation of Rs152 billion for their uplift.
Despite financial difficulties, he said, the Public Sector Development Programme (PSDP) allocations had been enhanced form Rs575 to Rs925 billion and again the projects of neglected areas had been prioritised.
He said that the industries would be provided subsidized gas to help industrial growth that would help generate jobs. In addition, the import of around 1650 tariff lines had been zero-rated to make the country’s products compatible in international market, he added.
He, however, clarified that there would be no tax on export-oriented products, adding that if the same products were sold in local market, tax would be implemented.
The adviser said that it was matter of satisfaction that the process of democracy was moving ahead. “Some 225 National Assembly (NA) members had delivered speeches during the budget session and the opposition was given more time as compared to the treasury benches,” he added.
Shaikh said that the finance bill was given proper consideration by the Senate, and its finance committee. He also said that the supplementary grants had been reduced to Rs220 billion from Rs600 billion last year, where the excess budget of seven years was also cleared.
Replying to a question, Hammad said that during the year 2019-20, the government would have to pay Rs2.9 trillion on account of debt servicing while during the previous fiscal year (2018-19), it had retired principal external debt of $10 billion along with interest.
He said that the major thrust the budget was that the government had reduced taxes on inputs while increasing taxes on finished luxury goods.
To another question, Hammad said that the government was transferring the burden of taxes to the services sector as well. “Until now, the industrial sector was the major contributor of tax revenues, but henceforth, a large number of untaxed people belonging to the services sector, including doctors, lawyers, information technology professionals and others will be brought into the tax net,” he added.
Zaidi said that without broadening the tax net, the revenues could not be improved. “Capacity extension depends upon availability of data and not the existing tax filers,” he added.
He said that under the amnesty, about 80,000 new people had become tax filers.
Hammad said that the scheme was a great success as it was attracting huge number of people to declare their assets and each hour, thousands in numbers were entering into the tax net. “A huge quantity of hidden assets had been declared so far,” he added.
He further said that majority of the new tax filers were small businessmen, shopkeepers, jewelers, and others, who were doing businesses worth of billions of rupees but were untaxed.
Zaidi said that the Benami Commission would be operational from July 1 and would be fully mandated to take actions against the benami property holders. He urged the people to take advantage to the scheme to avoid any legal prosecution.
To a question with respect to reforms in the FBR, Zaidi said that major reshuffling in the bureau was avoided due to the budget and the amnesty scheme. “However, work on the reforms would be initiated in next week,” he added.
He further said that by next week, the process of sales tax registration would be made quite easy and a person would not need help of any expert to fill in the registration form. Moreover, by August, filing of tax return would also be made easy to facilitate the filers, he added.
The FBR chairman further said that the people had previously never had a good reason to think that the government has some sort of data on them regarding their taxes. “Now we have integrated data that serves as a driving factor,” he stated.
Explaining the taxes on cigarettes, Hammad denied the impression that taxes on the tobacco industry had been revoked to appease any lobby. “The only revoked taxes are import taxes. Taxes on tier 1 and 2 have been increased per pack of cigarettes, up to Rs8 even. All this money will be directed towards healthcare,” he concluded.