Govt, senator lock horns over exemptions to non-filers

ISLAMABAD: The Senate Standing Committee on Finance on Monday asked the Pakistan Tehreek-e-Insaf (PTI) government to rescind its mini-budget decision to allow tax non-filers to purchase new cars and property worth over Rs5 million.

Kick-starting its deliberations on the amended budget for the ongoing fiscal year 2018-19, the Senate committee's members did not buy into the PTI-led government's explanation that the decision was taken to facilitate overseas Pakistanis. To assist them, the committee members said there must be ways other than granting blanket permissions which would be taken advantage of by tax evaders.

The prime minister’s advisor on revenue, Hammad Azhar, informed the senators that the government was working on a plan to tackle tax non-filers, under which they could be denied commercial and industrial electricity connections.

Senator Haroon Akhtar of the Pakistan Muslim League-Nawaz, himself a former revenue adviser to the prime minister, wanted to know about the government’s plans to curtail the current account and budget deficits. Only development outlay had been slashed in the mini-budget and this would negatively impact on economic growth prospects, he argued. Haroon contended that the taxation measures introduced by the government in the revised budget would shrink the revenue collection base, rather than broadening it.

Hammad threw light on the government’s tax reform strategy and said that it would prevent tax evasion. He said that a one percent duty reduction for 34 tariff lines had been proposed so as to stimulate the growth of exports. Responding to Haroon's criticism, he said that the previous government had not undertaken any structural reforms and relied heavily on borrowing-led growth. The previous government policies had increased the current account deficit to $18 billion during the last fiscal year, he retorted. The last budget presented by the previous government was highly fiscally irresponsible and the new government had to take corrective measures to make it realistic and workable, he said.

Hammad said that incentives have been provided to exporters in the revised federal budget so as to revive the approximately 200 textile units which were closed due to the policies of the PML-N government. Their revival would increase export proceeds and provide employment opportunities, he said.

Mohammad Jehanzeb Khan, Chairman of the Federal Board of Revenue (FBR), told the Senate committee that any abrupt reforms to the informal economy would cause serious damage to the overall economy. Therefore, the FBR was trying to address the issue in such a way that tax evaders would not be able to escape the tax net, whereas those who are not required to file returns would be protected. They include pensioners, widows, overseas Pakistanis and those inherited properties.