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Country cannot run on charity alone: FBR chairman

Updated July 19, 2019

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FBR Chairman Shabbar Zaidi addressing a symposium in Islamabad on Friday, July 19. — Photo provided by author
FBR Chairman Shabbar Zaidi addressing a symposium in Islamabad on Friday, July 19. — Photo provided by author

Federal Bureau of Revenue (FBR) Chairman Shabbar Zaidi on Friday called on the nation to pay taxes as "giving zakat, charity money and donations is simply not enough".

The remarks came as he addressed a symposium in Islamabad, titled 'Pakistan Economy and IMF Programme: Challenges and Opportunities' organised by the Sustainable Development Policy Institute (SDPI).

"I have endured enormous pressure over the past two weeks. I meet 13-14 delegations every day with whom I hold discussions."

"Everyone says the same thing: 'Please stop charging all these taxes'. We must realise that simply giving zakat, charity and donations is not enough," he said, adding, "Everyone is equally liable to pay taxes."

Read more: Anatomy of a crisis

The chairman also asked why such a big deal was being made over the provision of the National Identity Card (NIC) for shopping worth Rs50,000 or more.

"Everyone is raising a hue and cry over the requirement of showing the NIC for purchases over Rs50,000. Even beggars have identity cards [these days]. What is the problem in showing your identity card?" he asked.

Talking about the economic situation, he said Pakistan has transformed itself into a trading country from a semi-manufacturing country.

"We are importing everything from chocolate to mineral water to shoes. The previous year, imports stood at $51 billion, whereas exports stood at $21bn. No country can function like this," he said.

Examine: Why don’t we pay taxes?

Quelling the fears of exporters, he said that taxes have only been imposed on local trade of goods and not on the export sector.

He also regretted the proliferation of hawala and hundi businesses.

"No questions were ever asked when it came to remittances coming in from abroad which led to the mushrooming of hawala and hundi businesses," he remarked.

'IMF not in Pakistan to cash in on profit'

International Monetary Fund's country representative to Pakistan Maria Teresa Daban Sanchez, while addressing the symposium, said that some misconceptions regarding the Fund were found to be prevalent in Pakistan.

"The IMF does not give Pakistan a loan package with the objective of earning a profit," she said, contradicting a popular opinion held by many critics.

"The IMF provides loan to member countries in the time of their need," she added.

Maria Teresa Daban Sanchez addressing the symposium.
Maria Teresa Daban Sanchez addressing the symposium.

She recounted that Pakistan had approached the IMF 18 times and that debt repayment was a big issue in the country, with 25 per cent of revenues being spent on loan payments. She noted that Pakistan has very low revenue collection figures compared to other countries.

She did, however, say that it was a welcoming sign to see that the current account deficit has reduced.

Explore: Reading the IMF programme

Sanchez further observed that the tax exemptions accorded to individuals are far greater than they should be. The IMF representative also noted that Pakistan spends only 1pc on the education and 2pc on health.

She said that the tax to GDP ratio is between 10pc and 12pc — which in other countries is 15-16pc. She strongly urged Pakistan to prioritise spending in social development.

The IMF official cautioned that Pakistan will have to step up efforts in implementing the FATF conditions. Sanchez also said that within the next three years, Pakistan will have to reduce its debt-to-GDP ratio from 80pc to 60pc.

'Would have negotiated a bigger package'

Former State Bank of Pakistan governor Dr Shamshad Akhtar, while delivering her address, remarked that the government had been late in procuring the IMF package and that a lesser amount had been obtained considering the conditions attached to the loan.

Dr Shamshad Akhtar addressing the symposium.
Dr Shamshad Akhtar addressing the symposium.

"If I had negotiated, I would have asked for a bigger package," she added.

Take a look: The last IMF loan?

She said that the past government had kept the dollar rate low and made exports cheaper that way. "Artificially keeping the dollar rate low was not a wise move."

"The State Bank should have been advised to raise the dollar prices. Keeping the dollar controlled is dangerous for the economy."

She also highlighted the need for institutional reforms to be brought in alongside economic reforms.