Adviser to Prime Minister on Finance Dr Abdul Hafeez Sheikh Wednesday said the government has a clear roadmap for generating Rs 5.55 trillion revenues during the fiscal year 2019-20 and protecting the 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 will remain intact, however the exporters selling their commodities inside the country will 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, Federal Board of Revenue (FBR) Chairman Syed Shabbar Zaidi and other top officials of the Finance Ministry.
The adviser said there were around Rs 1,200 billion domestic textile sales, but just Rs 6 billion to Rs 8 billion taxes were collected, which is unacceptable. He said the textile sector has to perform national duty and pay due taxes for overall uplift of the national economy.
Similarly, the adviser said, sales tax on different products will be collected at the manufacturing stage, which will help the government boost revenue collections.
In order to remove the misperception that non-filers can go scot-free by just paying higher tax and also to remove certain anomalies, he said the concept of ‘non-filer’ will be done away with as a scheme has been introduced which will force non-filers to become filers.
He said now it will not be possible for someone to remain non-filer as after purchasing any vehicle or property, it will be mandatory for him to file returns within 45 days. “Otherwise, within half an hour after the lapse of 45-day period, an automatic assessment will take place, asking the purchaser to disclose the source of income,” he elaborated.
The government, he said, has also made the process of filing return automated and easy and a person can now become filer in just six minutes by registering on the prescribed website of the FBR.
Explaining another tax measure, the adviser said the government will not charge any customs duty on import of raw material that is not being produced inside the country, adding that duties have been enhanced by 4 percent on certain luxury items to curtail imports.
He said despite financial constraints, the government did not slash funding of the public interest programmes, like spending for protecting vulnerable segments of the society and uplifting of under-developed areas, and has 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, has been launched to protect the vulnerable segments, for which the government has earmarked Rs 216 billion in the budget.
The adviser said the development budget has been enhanced to Rs 951 billion, which will be used for constructing dams and executing other important projects. Moreover, he said, special focus is being given to the poverty-hit areas, particularly in Balochistan and merged districts of erstwhile Federally Administered Tribal Areas (FATA), and substantial allocations have been made for various development projects there.
He said it is the first budget of Pakistan Tehreek-e-Insaf (PTI) government, which has been prepared at a time when the country is facing a difficult economic situation. He said when the incumbent government took over, the economy was in a 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. The exports did not witness any growth during the past five years, resulting in trade deficit of around $40 billion, he added.
He said the government had to earmark Rs 2.9 trillion for paying markup on national debt during the fiscal year 2019-20. It is even higher than the total expenditures of civil and armed forces’ combined outlays, and is more than half of the total tax revenues for which the target of Rs 5.555 trillion has been fixed for the fiscal year 2019-20.
He said it is unfair that whenever the current government has to take loans to pay back loans taken by the preceding governments, the opposition starts criticising it. “We have to learn to criticise 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.” “Debts are a reality and we cannot ignore this reality,” he said, and assured that all the new loans will be utilized only to pay back the previous loans.
The adviser lamented that at a time when the government is trying to steer the country out of the economic crisis situation, it is being criticised for a situation which is 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.
The adviser expressed the firm resolve of government to ensure full tax compliance in order to include the country in responsible and developed states of the world. He said compared to regional countries, Pakistan has low tax to GDP ratio. There are only one million filers out of about 50 million bank account holders, while only 380 out of one million registered companies file returns. He dispelled the impression that the government has imposed taxes on the export items in the federal budget, saying no duties will be imposed on the exports of products.
Speaking on the occasion, Minister for Power Division Omar Ayub Khan said relief in gas and electricity tariffs is 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 is being given to the export-oriented industry,” he said. “An amount of Rs 152 billion has been allocated for the development of merged tribal districts of Khyber Pakhtunkhwa, out of which Rs 83 billion is directly linked with the development projects in those districts,” he added. He said the armed forces provided Rs 172 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 has set the GDP growth target of 4% for the upcoming fiscal year, which will be achieved by implementing measures proposed in the federal budget 2019-20. He said the increase in development funding will have a positive impact on the GDP growth.
