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Tuesday March 19, 2024

Finance minister seeks timelines for FBR reforms

By Our Correspondent
November 18, 2018

ISLAMABAD: Finance Minister Asad Umar on Saturday directed the officials to set deadlines for executing administrative and policy reforms in the Federal Board of Revenue (FBR) to slash budget deficit that widened to mammoth 6.6 percent of GDP in the last fiscal year.

Umar appreciated the works done by the Economic Advisory Council’s (EAC) sub-group on fiscal sector, which was assisted by the senior FBR officers.

“(The minister) directed for setting timelines to various administrative and policy reforms suggested so that the huge fiscal burden facing (the) economy is reduced to minimal possible level and the government gets much needed fiscal space,” a finance ministry’s statement cited Umar as saying at a meeting of EAC sub-groups on national financial inclusion strategy and fiscal sector. The meeting was attended by all the major stakeholders/members of the sub-group from ministry of finance, State Bank of Pakistan (SBP), FBR and Securities and Exchange Commission of Pakistan. The finance minister also appreciated the financial inclusion strategy and emphasised on “diligently time-lining the goals, targets and actions to be taken”. The minister cautioned against delaying the implementation process of the strategy.

Tariq Bajwa, governor of SBP said the national financial inclusion strategy is to improve quality and increase access to financial services in the country. Bajwa outlined targets and necessitating policy actions to be taken at various levels in coming years to achieve the targets. The discussion revolved around fast-tracking the digitisation of financial services to reach out larger number of consumers, small and medium business and newly emerging entrepreneurs throughout the country.

FBR representatives made a presentation on the problems currently ailing tax administration system in Pakistan, and ad-hoc-ism of tax policy. They said the issues consequently lead to lower tax collection, contributing to massive fiscal imbalances.

The sub-groups also considered solutions to fix crippling tax system by recommending policy measures targeting two major areas: tax administration and tax policy. The meeting said information technology could help in getting more people into the tax net and spotting tax-avoiders. “Also coherent and continuous coordination among provinces and between the federal government and provincial governments is of paramount importance in avoiding incidence of double-taxation,” the ministry’s statement added.

Jehanzeb Khan, chairman of FBR said the board is starting an awareness campaign to let the people know how their tax money is being utilised. The government planned to separate policy and administrative functions in the FBR. The initiative entails role of the private sector and independent members in formulating of tax policy, which is to help broadening of tax base through innovative means instead of relying on indirect taxation that forms 60 of tax revenue. Fiscal deficit ballooned to Rs2.26 trillion during the last fiscal year from 5.8 percent in the preceding fiscal year. The government set a fiscal deficit target at 4.9 percent of GDP for FY2019, which is based on a 12.7 percent anticipated growth in FBR tax revenues and a 10 percent increase in expenditures.