Pakistan Institute of Development Economics


Govt to phase out SROs, says FBR chairman

Publication Year : 2015
Explore More : PIDE in Press

ISLAMABAD: Chairman FBR Tariq Bajwa has said that the government intends to abolish concession based tax exemptions and increase different tax rates for non-filers during 2015-16.He also underlined the need to bring all kinds of income into the tax net, as income beyond certain threshold from agriculture also needs to be taxed.“There is need to establish National Tax Collection Agency in consultation with the provinces in order to resolve problems of taxpayers,” chairman FBR said while addressing pre-budget seminar organised by Pakistan Institute of Development Economics (PIDE) in collaboration with Germany’s Friedrich-Ebert-Stiftung (FES) here on Wednesday evening.He said the government could easily collect Rs20-40 billion by bringing agriculture income into the tax net and for the purpose of equity all kinds of income should be taxed irrespective of its source.He said it was need of the hour that all political parties evolved consensus on national economic agenda including taxation. Without mentioning PTI, he said that there was need to evolve consensus that no political party would give call for civil disobedience by asking people not to pay their due taxes.When asked to comment on the proposal by PIDE economist Dr Idrees Khawaja regarding hiring of top man in the tax machinery from outside the bureaucracy by advertising the post, Mr Bajwa said that he was open to it but it was related to overall reforms in the civil services.He said that the lowest tax-to-GDP ratio and narrowed tax base were the biggest challenges for the tax collection machinery where only 0.4 percent population comes into the category of return filers. In India, he said, the number of filers stood at 4.5 percent of total population.He also conceded that sectoral imbalances did exist that resulted into burdening the existing taxpayers. Citing an example, he said that the contribution of retail sector to GDP stood at 17 percent while its share in revenuecollection was just 1 percent.Talking about Statutory Regulatory Orders (SROs), he said that the government has prepared a three-year plan to phase out SROs but reminded that only concessions for individuals and sectors would be abolished while those SROs would stay which were meant for regulatory purposes.In the previous budget, he said, the government abolished SROs worth Rs203 billion and more SROs would be abolished in the coming budget.He also said that the perception regarding corruption in the tax machinery needed to be changed and there was need to introduce performance-based evaluation system to run the FBR in an efficient manner.Chairman Tax Reform Commission (TRC) Masood Naqvi said that the lack of enforcement was the biggest problem of the tax machinery. He emphasised that all income irrespective of source should be tapped. In medium to long term, he proposed, there is need to set up National Tax Agency to collect all taxes (federal, provincial and local) and the robust technology should support its allocations to federation, provinces and the local bodies.He also called for devising measures to enhance the taxpayers’ cost of evasion, reforming the entire tax collection system preventing dodgers from going underground and strengthening tax administration to increase potential of discovering non-compliant tax payers.Nauman Ishtiaq, consultant in ministry of finance, on the occasion, dwelt upon the systems and procedures for budget making process and said that there was need to bring further improvements in this whole process.Former economic advisor, Dr Ashfaque H Khan, who is currently serving as dean NUST Business School, warned that Pakistan had landed into stagflation and criticised the IMF which was advocating tight fiscal policy by considering budget deficit as sacrosanct target.“The IMF has turned into European Monetary Fund (EMF),” he said and added that Pakistan should be allowed to hike the budget deficit with the purpose of increasing public investment for promoting jobs-led growth. Noted economist Dr Athher Maqsood, former advisor Sakib Sherani, Dr Idrees Khawaja and VC PIDE Dr Asad Zaman also spoke on the occasion.