LAHORE, June 15: Federal Finance Minister Shaukat Aziz has said that a law prescribing parameters for government borrowing will be presented in the next session of the parliament.
Speaking at a post-budget seminar organized by the Lahore Tax Bar Association here on Sunday, the minister said that adoption of such a law was necessary for ensuring fiscal transparency. He said that procurement of loans without proper debt management was like mortgaging the future generations.
He said that a scheme for extending house building loans to the government employees by the banks was being launched shortly. The banks would be receiving instalments equal to the rent of three to five marla houses under the scheme. Arrangements would be made for deduction of the loan instalments from the salaries of the employees.
He said that the IMF programme would conclude next year and the country would not need it in future. He said that the country had paid a high price for the repayment of the IMF loans in the past and had been humiliated internationally. He said that 80 to 90 per cent of the fiscal policies for which the IMF was blamed had been proposed by the government itself.
He said that 5.6 per cent growth rate proposed in the federal budget for the next financial year was the highest in South Asia. It would facilitate increase in incomes and creation of new job opportunities by encouraging investment in agriculture, housing and small and medium size enterprises.
He said that the government was determined to continue its tax reforms with the nerves of steel. It had already done away with most of the whitener schemes and tax exemptions and shifted the focus of taxation from import and investment to consumption. Administrative reforms had been introduced along with the changes in tax structure for encouraging voluntary compliance.
Mr Aziz said that the government was pursuing the policy of reducing the tax rates and taxing the untaxed and under-taxed sectors, including the agriculture besides encouraging voluntary compliance. As many as 2,34, 149 new taxpayers had 34,000 sales taxpayers had been added to the tax base as a result of the national tax survey. It was now moving towards the audit culture from the assessment culture.
He said that the 12 per cent excise duty had been abolished and customs duty collection was up despite reduction of its maximum rate to 35 per cent. The government was now trying to control under invoicing by registering importers and intense scrutiny and monitoring. He said that people would have to pay only income tax, sales tax and customs duty in future. He said that a pilot project for customs clearance of goods within 48 hours instead of two weeks would also be started soon.
He said that persistence of large fiscal deficit of an average seven percent of the GDP had resulted in sharp accumulation of public debt rising from Rs928 million in 1990-91 to Rs3231 trillion in 1990-2000. The debt grew from 91.3 per cent of the GDP to 103 per cent and from 541 per cent of total revenue to 630.4 per cent during the period.
He said that the debt-servicing liability continued to rise as a result of unsustainable rise in the public. It increased from 36 per cent of the total government revenue in 1990-91 to almost 64 per cent in 1999-2000 leaving only 36 per cent for meeting the rest of requirements. The country continued to sustain large scale deficit equal to an average seven per cent of the GDP despite efforts to achieve fiscal consolidation.
The finance minister said that the tax structure in the country was stagnant due to being complex, inelastic, inefficient, inequitable and unfair.