Advisor to PM on Finance Dr. Abdul Hafeez Sheikh has said that the proposals need to be simplified and kept fewer than before to ensure ease of doing business and reduce compliance costs.
ISLAMABAD: (UrduPoint/Pakistan Point News-May 15th, 2020) The Federal board of Revenue’s (FBR) proposals for next year finance bill did not reflect the vision of the ruling Pakistan Tehreek-e-Insaaf (PTI), Special Assistant to Prime Minister on Finance Dr. Abdul Hafeez Sheikh said here on Friday.
He said the proposals needed to be simplified and kept fewer than before to ensure ease of doing business and reduce compliance costs.
The Special Advisor to PM on Finance Hafeez Sheikh expressed these views while talking to budget makers of the Ministry of Finance and the Federal Board of Revenue during formal meetings on budget exercise for next fiscal year.
“The government is planning to announce the federal budget in the first week of June,” said Hafeez Sheikh, adding that FBR’s proposal regarding budget philosophy is not according to the vision of the government as it wanted simplification of tax and tariff regime.
He questioned the proposals floated by FBR for tax collection.
“Why there are so many taxes when they are not meant to yield very little or nothing despite that there is lot of hassle to the taxpayer?,” asked the sheikh. He also asked that why they could not bring down the number of axes to four or five with high yield and get rid of others.
“Make the budget a simple policy document rather than a horrible story,” he suggested.
Moreover, the sources said that Sheikh also rejected other proposals to increase in some taxes, observing that it was not right time to increase tax rates amid fears of economic downturn and instead a stimulating approach be adopted.
“Let us align the budget document with the intent and philosophy of the government to simplify issues and eliminate noises,” he was quoted as saying.
He also said that they (FBR) needed to justify so many taxes such as custom duty, additional custodm and regulatory duty and what they deliver. Commerce Advisor Abdul Razak Dawood, Reforms Adviser Dr Ishrat Hussain and Industries Minister Hammad Azhar were also present there in the meeting.
The reports suggested that all the economic cabinet members had advised the government to reduce the the number of taxes.
They said that FBR and other relevant authorities were informed that they could not simply use the name of International Monetary Fund to justify a tax measure or to subvert a reform process.
“Revenue yield, its impact on economy and compliance costs to taxpayers should be the base for that justification,” they quoted him as saying.
The FBR was also informed that it would be required to meet around Rs. 5.1 trillion target for the next year, almost 30 per cent higher than recently revised estimate of about Rs3.9tr for FY20.
The Ministry of Commerce was directed to meet again and if it wanted to reduce duties from current 11pc to 1.5 per cent then better these should be kept zero to avoid another hassle to businesses and come back with revised strategy within a week.
Besides it, the number of withholding taxes should be reduced.
The government decided to skip the priorities committee meetings this year to finalise a development programme that would be kept contained at about Rs600bn — down from FY20 level of Rs701bn owing to Covid-19 in line with the IMF talks — and would be directly taken to the National Economic Council for approval.
