Govt gears up for targeted tax reforms

KARACHI: The government is weighing new taxation reforms to bring wealthy individuals into the tax net and additional export incentives to bolster external accounts, finance minister said on Thursday.

“We are reviewing taxation reforms with aims to bring all the taxable income into tax net,” Finance Minister Asad Umar said, addressing a business convention via a video link from Islamabad. “We want to bring wealthy people into the tax net.”

The statement from the finance ministry’s chief came after the apex tax authority missed revenue collection target by Rs15 billion during the first quarter of 2018/19 as the Federal Board of Revenue managed to collect only Rs836 billion during the three months.

The government is facing a challenging task to generate Rs4.4 trillion in revenue in the current fiscal year and to contain budget deficit at 5.1 percent, compared to the earlier target of 4.9 percent, and as against 6.6 percent recorded in the last fiscal year of 2017/18. The finance minster further said an individual purchasing property valuing above five million rupees should pay tax and get enrolled into the tax net.

“There is no rocket science involved in the taxation system… it is a matter of reforms that bring improvement.”

On China-Pakistan Economic Corridor (CPEC), the minister said it is a game-changer for the Pakistan’s economy. CPEC is between the two countries, “but the government is ready to talk with the third party on such projects”.

Umar said Pakistanis could avail benefits from expertise of China in agriculture and other important economic sectors.

“China has a strong supply chain in the world,” he added. “We need to avail benefits from their expertise.” The finance minister said the government is giving importance to the measures to enhance exports to ease burden on the external sector. On recent declines in stock exchange, Umar said it is not a big issue as “the market has recovered after improved economic sentiments”.

The minister, however, said Pakistani companies need to improve their performance.

The finance minister said the government is focusing on the long-term plans for sustainable economic growth.

Abdul Razak Dawood, advisor to Prime Minister on commerce said the government is taking measures to tackle foreign debt repayment and import payment challenges.

“In order to boost exports, incentives have been announced in shape of reduction in prices of gas and electricity for zero-rated export sectors,” Dawood told the businessmen.

The advisor said the present government is successful in getting a bailout package from Saudi Arabia. “I hope similar package would be announced during visit of the prime minister to China.”

Dawood said Pakistan has improved its ranking in the World Bank’s ease of doing business by 11 notches to 136. “We eye ranking below 100.”

The PM advisor said the government is considering harnessing CPEC projects to increase exports.