No new taxes on use of telecom, internet, clarifies Shaukat Tarin

ISLAMABAD: Finance Minister Shaukat Tarin on Saturday clarified that no new duties would be imposed on telecom and internet usage a day after the proposal came under fire for being at odds to the Prime Minister’s goal of a digital Pakistan.

Addressing the post-budget press conference, the minister said the finance bill had proposed one rupee per call if the duration exceeds three minutes, 5 rupees per gigabyte for internet usage and 10 paisas on each SMS. “However, the federal cabinet did not approve the duties hence these will not be part of the budget,” the minister clarified.

Tarin said the main focus of the “inclusive growth-oriented” federal budget for fiscal year 2021-22 was to “uplift the poor so that they will not have to wait for the trickle-down effect of economic progress”.

“Low-income people have been waiting for that for the last 74 years, as they remained deprived of houses, health facilities and business opportunities,” Tarin said.

The government, he said, was now directly targeting the poorest of the poor and facilitating them with different initiatives to upgrade their living standards, without waiting for the trickle-down effect, and for that, around 20 years of stable economic growth was required.

The minister said it was not an easy task, however, he was thankful to Almighty Allah for giving the incumbent government the vision to work for the poor. The government, he said, through the budget would utilise the ‘bottom-up-approach” for improving the living conditions of around 6 million low-income households.

He said under the initiative, every household would be provided Rs500,000 interest-free business loan. Every farming household would be given an interest free loan of Rs150,000 loan for every crop, interest fee farming loan of Rs250,000 and interest free loan of Rs200,000 for buying tractors and agricultural implements.

Tarin said low-interest bearing housing loans of up to Rs2 million would be provided to help the people buy houses, while Sehat cards will be given to every household to facilitate them in their time of need.

Moreover, one person from every household would be imparted free technical training to ensure employability so that the family earns respectable income, he added.

The government, he said, did not have room to provide all such loans. Commercial banks would be involved, which would provide wholesale financing, while government would be providing guarantees for loan recovery.

The minister said the identification of the poorest households would be done through a non-political survey all across the country. “We will not play politics with the poor,” he added.

Tarin said after achieving economic stability, the government was following a comprehensive strategy to lead the country towards sustainable growth. The government’s primary focus in that regard, he said, was to promote exports and take their volume from 8 per cent at present to 20 per cent of GDP. There was a dire need to enhance exports for economic sustainability, he stressed.

The minister said for the first time, a growth-oriented budget was presented, including innovative measures to enhance revenue collection, expansion of incentives for exporters and abolishing duty on local industry, including the automobile sector.

The finance minister said a team of renowned economists, headed by Dr Ishrat Hussain, was set up for identifying bottlenecks that hindered economic development, in addition to suggesting measures to overcome challenges to achieve sustainable growth.

He said the economists suggested increasing savings and revenue collections, emphasise producing import substitutes and encourage exports by incentivising local trade and businesses, besides focusing on the agriculture sector to reduce reliance on imported food stuff.

The minister said savings were imperative for creating room for investment. “Pakistan’s savings-GDP ratio,” he said, “is lower than other developing countries, and the government has proposed special measures in the current budget to promote savings”.

Furthermore, he said, revenue collection was another important tool to maintain sustainable growth. Local annual revenue started receding after witnessing 11 to 12 per cent growth, which resulted in the availability of fewer resources for the social sector development.

The minister said in order to create resources to fulfil development requirements as well as to maintain sustainable growth, annual growth of revenue was required to grow by 20 per cent. “Efforts are under way to increase the revenue at that level within seven to eight years to create abundant resources for development work.”

To meet the future development expenditures, he said, the government had set a challenging target of revenue collection of over Rs5.8 trillion against Rs4.7 trillion for the current financial year.

Tarin said in order to achieve the realistically aggressive revenue targets of Rs5.8 trillion set for fiscal year 2021-22, innovative ways and means would be used without overburdening the existing tax payers and introducing incentives for consumers.

He said the Federal Board of Revenue (FBR) had also started data collection for identifying the potential tax payers, who were eligible to pay tax but were out of the tax net so far. The measure was expected to bring about 312,000 potential tax payers under the tax net, he added.

Moreover, he said, some 10,000 Points of Sale (PoS) were currently under use and their number would be enhanced by bringing 60,000 more business establishments under the system. Tarin said in order to strengthen the PoS system, incentives and prize schemes would be announced for the general consumers that would help in the documentation of the economy. Revenue collection of about Rs100 to Rs150 billion was expected through the PoS system, he added.

He said for bringing different industries under the tax net, the scope of the track and trace system would be expanded, which would not only help enhance revenue collection, but also promote a culture of tax compliance in the country.

The minister said the government was keen to develop the agriculture sector as it would help check rising inflation. Special measures were announced in the budget for the uplift of sector.

The government, in its current budget, he said, had also suggested steps to promote exports that would help reduce pressure on foreign exchange reserves, in addition to developing the local industrial sector.

The Special Economic Zones being set up under the China-Pakistan Economic Corridor would also help in local industrial development and create job opportunities for skilled and semi-skilled work force, he added.

Special tax relief was suggested on the import of plant and machinery that would also help in attracting foreign investment, the minister said.—