ISLAMABAD: Finance Minister Shaukat Tarin has said the government has sought from the International Monetary Fund a six-month extension of the amnesty scheme launched under the prime minister’s package for construction industry.
Prime Minister Imran Khan had announced the package in April 2019.
“We have approached the IMF for an extension of the scheme for the construction industry for six months,” Mr Tarin said at a post-budget briefing on Saturday, adding that the people were opting for the scheme to avail the facility.
The government has already extended the last date of the scheme until June 30 from Dec 31 last year. The builders and developers are required to get registered on computer-based IRIS software of the Federal Board of Revenue (FBR) on or before June 30 this year and the projects should be completed before Sept 30, 2023.
Official statistics show that 1,083 projects worth Rs340 billion have been registered with the FBR along with another 292 tentative projects with an indicative investment of Rs43bn under the prime minister’s package for the construction industry till May 2021.
About 3,851 buyers had shown interest in purchasing properties by availing tax incentives for the construction sector till May 6.
The finance minister said that the government wanted to facilitate those intending to invest their untaxed money in the construction projects. The facility of non-disclosure of sources of income has been extended till June 2021 and the amnesty scheme till Dec 2021 to avail the fixed tax regimes for the construction sector.
On the performance of revenue collection, Mr Tarin pointed to lack of revenue as another major impediment to economic growth and said the government wanted to “accelerate” revenue collection to 20 percent of tax to GDP ratio in seven to eight years.
He said the provinces would have to play its role in increasing the provincial tax collections as well. This will allow the federal and provincial governments to carry out development projects without taking loans.
On the basis of this assumption, he said the FBR target has been projected at Rs5.8 trillion for the next financial year, adding that it was “realistically aggressive target” but expressed confidence that it would be achieved.
The minister said the government’s focus was to bring more people into the tax net instead of imposing more taxes on those who were already paying taxes. He said the tax collection target of Rs5.8tr would be achieved through innovative approach, including the use of latest technology.
Mr Tarin listed several steps that his team took in the budget proposals such as bringing more people into the tax net, increasing point-of-sale systems to more retailers and encouraging accountability by the public through prize schemes and the track-and-trace system.
He said big retailers had sales of Rs1.5tr and sales tax had to be levied on all big stores. “We planned to capture Rs500bn in the next couple of years,” he said. Consumers, he said, will be rewarded through prize schemes worth Rs1bn per month if they get a slip and gave examples of other countries, saying that such successful schemes have come up in Turkey.
The minister said the government would reach non-filers through electricity and gas bills.
Asked about reforms in tax administration, he asserted that he would carry out reforms in the tax machinery. The private sector will be engaged with the FBR in carrying out reforms. “I will fix those who are not working,” he declared.
The World Bank has provided $400m to the FBR for carrying out the reforms. The pace of reforms is very slow and it needs to be expedited.
Mr Tarin remarked that developing countries initially relied mostly on indirect taxes.
Published in Dawn, June 13th, 2021