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Hafeez Shares Roadmap To Generate Rs5.55 Tr Revenues, Protect Vulnerable Segments


ISLAMABAD– Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh Wednesday said the government had a clear roadmap for generating Rs 5.55 trillion revenues during the upcoming fiscal year (2019-20) and protecting vulnerable segments of the society despite current financial constraints.

Sharing the roadmap at the post-budget press conference, the Adviser said the zero-rating of exports would remain intact; however the exporters who were selling their commodities inside the country would be taxed for domestic sales.

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

He said there were around Rs1,200 billion domestic textile sales,but just Rs 6 billion to Rs 8 billion taxes were collected, which was unacceptable. He said this sector had to perform national duty and pay due taxes for overall uplift of the national economy.

Similarly, the Adviser said that sales tax on different products would be collected at manufacturing stage, which would help the government boost revenue collections.

In order to remove the misconception that non-filers could go scot-free by just paying higher tax and also to remove certain anomalies, he said, the concept of “non-filer” would be done away with and a scheme had been introduced which would force non-filers to become filers, hence it would help enhance the number of tax filers.

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

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

Abdul Hafeez Shaikh said despite financial constraints, the government did not slash funding of the public interest programme like spending for protecting vulnerable segments of the society and uplifting of under-developed areas, and had even doubled allocations for projects under the Public Sector Development Programme (PSDP).

He said different initiatives, including Ehsaas programme, Seht Sahulat programme, low cost housing and subsidy on electricity for consumers using less than 300 units of electricity had been launched to protect the vulnerable segments, for which the government had earmarked Rs 216 billion in the budget.

The adviser said the development budget had been enhanced to Rs 951 billion, which would be used for constructing dams and executing other important projects.

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

He said it was the first budget of Pakistan Tehreek-e-Insaf (PTI) led government, which had been prepared at a time when the country was facing difficult economic situation.

The adviser said when the incumbent government took over, the economy was in critical condition with debt liabilities of around Rs 31,000 billion.

He said against the revenue collection of around Rs 4,000 billion, the country had to spend Rs 2,000 billion on debt servicing while the exports did not witness any growth during the past five years, resulting in trade deficit of around $40 billion.

He said the government had to earmark Rs 2.9 trillion for paying markup on national debt during the fiscal year 2019-20. It was even higher than the total expenditures of civil and armed forces’ combined outlays, and was more than half of the total tax revenues for which the target of Rs 5.555 trillion had been fixed for the fiscal year 2019-20.

He said it was unfair that whenever the current government had to take loans to pay back previous loans, taken by the preceding governments, the opposition started criticizing it. “We have to learn to criticize only on the basis of reality, not for the sake of mere criticism and politics,” he said, adding,”If any person thinks that the borrowings of current government are misused, then we are totally answerable to and will provide any detail in this regard.”

He said, “Debts are reality and we cannot ignore this reality.” However, he assured that all the new loans would be utilized only to pay back the previous loans.

The adviser lamented that at a time when the government was trying to steer the country out of the economic crisis situation, it was being criticized for a situation which was not its making.

Soon after coming into power, he said, the government tried to manage the situation and increased duties to cut imports and mobilized $9.2 billion from China, the United Arab Emirates and Saudi Arabia, and provided incentives for the export-oriented industry sector, which helped boost the exports.

The adviser expressed the firm resolve of government to ensure full tax compliance in order to include the country among responsible and developed states of the world. He said compared to regional countries, Pakistan had low tax to GDP (grass domestic product) ratio.

There were only one million filers out of about 50 million bank account holders, while only 380 out of one million registered companies, were filing returns. He dispelled the impression that the government had imposed taxes on the export items in the federal budget, saying no duties would be imposed on the exports of products.

The adviser said many measures had been announced in the budget to encourage the local industries and the exporters.

Meanwhile, speaking on the occasion, Minister for Power Division Omar Ayub Khan said relief in gas and electricity tariffs was being given to the export-oriented industry to bridge fiscal and current account deficits.

“Around 7.5 cent per unit in electricity and 6.5 cent per unit in gas tariffs relief was being given to the export-oriented industry,” he said. An amount of Rs 152 billion had been allocated for the development of merged tribal districts of Khyber Pakhtunkhwa, out of which Rs 83 billion was directly linked with the development
projects in those districts, he added.

He said the armed forces provided Rs172 billion and the civilian government Rs 52 billion space from their own budgets for the development in the said districts and Balochistan.

Minister for Planning, Development and Reform, Makhdoom Khusro Bakhtiar said the government had set the GDP growth target of 4% for the upcoming fiscal year, which would be achieved by implementing measures proposed in the federal budget 2019-20.

He said the increase in development funding would have a positive impact on the GDP growth.