The government on Sunday extended the last date of the assets declaration scheme till the office hours of July 3 (Wednesday) to facilitate people in declaring their undeclared assets and securing themselves from impending complications.
The extension in the deadline was announced by Advisor to Prime Minister on Finance, Revenue and Economic Affairs Dr Abdul Hafeez Sheikh here at press conference. He was flanked by Special Assistant to Prime Minister on Information Dr Firdous Ashiq Awan, Minister of State for Revenue Hammad Azhar and Federal Board of Revenue (FBR) Chairman Shabbar Zaidi.
“The asset declaration scheme has been witnessing a lot of interest at the last minute …. so it is extended till the office hours of July 3,” the advisor said, while briefing the media persons on the objectives of budget for the fiscal year 2019-20. He appealed to the people to take benefit of the scheme in their own interest as the government has already established the Benami Commission, which has been mandated to go after the benami properties.
Dr Sheikh said under the benami law, there are heavy penalties and severe punishment for those holding benami properties. “Since the assets declaration scheme is in its last stage, so I appeal to the citizens, whether they are inside Pakistan or abroad, to take advantage of it,” he said. “It is an easy way to bring the taxable hidden income into tax net,” he added.
The advisor expressed the hope that the International Monetary Fund (IMF) board will approve $6 billion extended fund facility for Pakistan. He said Pakistan will also get $3.4 billion from the Asian Development Bank (ADB), $2.1 billion of which is expected during the upcoming fiscal year (2019-20), while the country is also hopeful of assistance from the World Bank. He said since the external loans were provided on low-interest rates comparatively, so they are cost-effective and due not create much trouble in repayments.
The advisor enumerated five key areas that have been focus of the budget for the fiscal year 2019-20. Those are: 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 mobilize revenue (Rs 5.5 trillion). He said the economy was facing a crisis situation when the incumbent government took over. It had to face many challenges on external front in terms of current account deficit, trade deficit, and debts to the tune of Rs 31,000 billion, including foreign loans of $100 billion, he continued. 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 resultantly the current account deficit reduced from $20 billion to $13.5 billion. He said the current account deficit will be further reduced to $7.5 billion during the upcoming year.
The advisor said to overcome the economic challenges, the government mobilised about $9.2 billion in cash from China, Saudi Arabia and the United Arab Emirates. In addition, the $3.2 billion deferred payments facility agreement was signed with Saudi Arabia for oil imports. An agreement of $3 billion was also signed with Qatar, out of which $500 billion have been transferred. 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 Rs 2.9 trillion on debt repayment, while 52 per cent of revenues will be transferred to the provinces under the constitution and it is also bound to spend for the vulnerable segments. However, the government still reduced the expenditures by Rs 50 billion and did not increase the pays of government employees from grade 1-16 grade beyond 10 percent, and that of grade 17-20 employees by five percent and no raise for grade 20 and above employees. Moreover, the allowances of cabinet members were cut by 10 percent, while the budget for PM House was also reduced.
The advisor said the funding for social protection programmes has been almost doubled from Rs 100 billion to Rs 191 billion. He said in order to protect the common people, the government has allocated Rs 216 billion for providing subsidy to the consumers utilizing up to 300 electricity units while the neglected areas like the erstwhile FATA have been given special heed in the budget with allocation of Rs 152 billion for their uplift.
Despite financial difficulties, he said, the Public Sector Development Programme allocations have been enhanced form Rs 575 billion to Rs 925 billion and again the projects of neglected areas have been prioritised.
He said the industries will be provided subsidised gas to help industrial growth that will help generate jobs. In addition, the import of around 1650 tariff lines has been made zero-rated to make the country’s products compatible in international market, he added. He, however, clarified that there will be no tax on export-oriented products. If the same products are sold in local market, tax will be implemented.
The advisor said it is matter of satisfaction that the process of democracy is moving ahead. Some 225 National Assembly members delivered speeches during the budget session and the opposition was given more time as compared to the treasury benches, he said, adding that the finance bill was given proper consideration by the Senate and its finance committee as well. The adviser said the supplementary grants have been reduced to Rs 220 billion from Rs 600 billion last year, where the excess budget of seven years was also cleared.
Replying to a question, Hammad Azhar said during the year 2019-20, the government will have to pay Rs 2.9 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 the major thrust the budget is that the government has reduced taxes on inputs while increasing taxes on finished luxury goods.
To another question, Hammad Azhar said the government is 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.
FBR Chairman Shabbar Zaidi said without broadening the tax net, the revenues cannot be improved. “Capacity extension depends upon availability of data and not the existing tax filers,” he said, and revealed that under the assets declaration scheme, about 80,000 new people have become tax filers. Hammad Azhar said the scheme has been a great success as it is attracting huge number of people to declare their assets and each hour, thousands in numbers are entering into the tax net. A huge quantity of hidden assets has been declared so far.
He said majority of the new tax filers are small businessmen, shopkeepers, jewelers, and others, who are doing businesses worth of billions of rupees but are untaxed.
Shabbar Zaidi said the Benami Commission will be operational from July 1 and will 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 major reshuffling in the bureau was avoided due to the budget and then assets declaration scheme. However, work on the reforms will be initiated next week.
He said by next week, the process of sales tax registration will be made quite easy and a person will not need help of any expert to fill in the registration form. Moreover, by August, filing of tax return will also be made easy to facilitate the filers, he added.
