Tarin sets tax-to-GDP target at 20pc for FBR

Published September 18, 2021
This file photo shows Finance Minister Shaukat Tarin addressing a press conference  at the Finance Division in Islamabad. — Photo courtesy Radio Pakistan/File
This file photo shows Finance Minister Shaukat Tarin addressing a press conference at the Finance Division in Islamabad. — Photo courtesy Radio Pakistan/File

ISLAMABAD: Finance Minister Shaukat Tarin on Friday asked top officials of the Federal Board of Revenue (FBR) to follow an ambitious target of taking tax-to-GDP ratio to 20 per cent over the next six to eight years.

At the same time, he expressed the hope that the FBR team would spare no effort or avenue to not only achieve the revenue target of Rs5.8 trillion but also exceed it by a wide margin. So far, he said, the FBR had been on track to achieve this year’s target as it had already surpassed the target with a margin of Rs160bn during the first two months of the current fiscal year.

The target for increasing the tax-to-GDP ratio is not only ambitious but also unrealistic given the fact that it was recorded at 10.9pc in FY21.

Mr Tarin said three areas are of importance for the current government — broadening the tax base, integrating big retailers with the tax machinery and introducing track & trace system for tax-prone sectors. “The broadening of tax base is one of the top priorities of my team for the current year and we have constituted committees comprising private sector experts and Nadra (National Database and Registration Authority) and FBR officers who are working tirelessly,” the finance minister said while addressing senior FBR officials at the board’s headquarters.

Says broadening of tax base top priority of government

He said these committees were also working on assessment of FBR’s resource constraints, especially finances and logistics, and would recommend the ways and means of overcoming these constraints.

The minister said the other flagship initiative was integration of points of sales, aimed at recording real time transactions at the retail level, adding that and it has huge potential to increase revenue for the state. He said the track & trace project would be rolled out from November as the stay granted by the high court against it had been vacated and he had also approved Rs432 million funds for the project.

Mr Tarin said a technical supplementary grant of Rs3.8 billion had already been approved to upgrade the tax machinery’s IT system and its security. He believed automation in the tax system would bring about transparency and reduce discretionary powers which had been a long demand of the business community.

Under the Pakistan Single Window project, he said, more than 70 different departments would converge on one platform to facilitate the business community, which would promote trade in the country.

The minister appreciated the FBR for making significant headway towards harmonisation of sales tax between the federation and federating units under the umbrella of the National Tax Council. He called the Integrated Transit Trade Management System a landmark project which would connect the whole region from Central Asia to South Asia after its completion.

He said anti-smuggling and counter-smuggling initiatives were the topmost priority areas and the prime minister was very concerned about them. He praised the FBR for its efforts to curb smuggling despite resource constraints. He paid tribute to the sacrifices by customs officials who laid down their lives in the line of duty.

The minister assured the senior officials that the incumbent government was fully committed to granting the FBR operational and financial autonomy in order to rule out the possibility of political interference, thus making it an efficient, merit-based, service-oriented and public-friendly organisation.

FBR Chairman Ashfaq Ahmed said the government’s priority was to create an enabling environment for trade and business, especially small and medium enterprises, through simplification of laws and procedures, and to stimulate economic activity. “FBR, being cognisant of this vision, has taken a number of concrete measures to translate it into reality,” he added.

Mr Ashfaq assured the finance minister that FBR team was fully geared towards achievement of the revenue target for this year as well. “We are on track and would not leave any stone unturned for surpassing the historic milestone of Rs5.8 trillion,” he said.

Published in Dawn, September 18th, 2021

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