ISLAMABAD: The government will present an alternative formula to the Supreme Court for revival of taxes on mobile phone cards to bridge the revenue shortfall and meet budgetary target instead of imposing any new taxes in the next five months.
“No new taxes will be imposed in the current fiscal year to achieve revenue target as prior conditions for availing the International Monetary Fund (IMF) bailout package,” said State Minister for Revenue Hammad Azhar here on Thursday.
The minister was addressing a hurriedly called news conference at press information department to respond to the criticism raised by PML-N lawmakers over the performance of economic indicators and downgrading by rating agencies.
While rejecting their remarks, Azhar said that negotiations with the IMF are continued and some improvement has been made referring to the conditionalities. “We will not accept any conditionality attached with the IMF that will directly impact our economy or people,” the minister said.
He said no additional revenue measures will be taken except to present a new formula to revise taxes on telecom services as the court had rejected Federal Board of Revenue’s earlier formula. “Now we are hopeful that the court will consider our formula,” Azhar said.
In June 2018, the Supreme Court suspended deduction of taxes on the top-up of prepaid cards by mobile phone service providers. The annual revenue collection alone from these is around Rs80bn.
PTI government entered into talks with the IMF soon after coming into power but the scale of adjustments being demanded by the lender were too large and as a result, the programme faced delays as the IMF demands in their current shape are too steep to be implemented.
Asked about the exact timing of accession to the programme, the minister said it depends on improvements in their conditionalities. However, he said that his government has successfully managed required funds on bilateral basis.
He said that his government has procured some breathing space through bilateral support from Saudi Arabia, United Arab Emirates while talks with China are near conclusion. “You will hear a very good news from China soon,” Azhar said, adding that modalities are being finalised currently.
On the revenue shortfall, he attributed it mainly to suspension of tax on mobile cards, slashing of sales tax rate on petroleum products. He said his government avoids increasing sales tax to pocket easy revenue.
Under the proposed reforms process, federal taxes will be clubbed together in the first phase while during the second stage, provincial taxes will also be brought under the same built. He said the ultimate target is to create single tax machinery for ease of doing business.
According to the minister, provinces have shown willingness to collect taxes at the federal level. He also said there is a proposal on table to separate assessment and audit. The internal audit department will also report to Prime Minister Secretariat.
The minister avoided replying to the questions about delay in taking action against corrupt tax officers.
He said FBR has chalked out a comprehensive plan to bring high net-worth individuals in the tax net. “We have requested some 8-10 countries to share with us data regarding Pakistani assets,” the minister said, adding a similar request was sent to Switzerland in January.
Published in Dawn, February 8th, 2019