Emphasising on pro-poor budget with more tax on wealthy people from fiscal (2008-2009), the Federal Minister on Finance Ishaq Dar has directed the Federal Board of Revenue (FBR) to explore new avenues for reducing tax collection gaps in sectors with the same potential.
During a one and a half hour meeting with the Secretary General Revenue Division/Chairman FBR M. Abdullah Yusuf on Thursday at FBR, the new Finance Minister and tax authorities discussed various aspects of new taxation policy.
According to sources, Finance Minister said that the wealthy people have enjoyed all kinds of tax benefits in the past. Now, it is the time that they should give something to nation in the form of taxes.
Some of the major issues discussed included time-bound exemption of income tax to the companies intended to install new power plants in Pakistan. It was discussed that the new Independent Power Producers (IPPs) may not be give life time exemption of income tax under Income Tax Ordinance 2001. The new companies may be given 100 percent depreciation allowance on the import of plant and machinery during the first year.
During the meeting, tax officials also pointed out misuse of section 111 (4) of the Income Tax Ordinance 2001. It is an important provision dealing with the unexplained assets and income tax to check black economy in Pakistan. The section 111(4) gives protection to the genuine foreign income earned and subsequently sent to Pakistan through normal banking channel.
Tax officials also referred to possibility of revising fixed tax rate schemes applicable for different sectors. The capital value tax, capital gain tax, wheat and other issues were also discussed.
On completion of the presentation given by FBR Member Fiscal Research and Statistics (FRS), the Finance Minister has directed the FBR submit viable budget proposals for 2008-2009.
Meanwhile, FBR has announced that the Federal Minister for Finance Ishaq Dar visited FBR Headquarters and was given a detailed briefing by Chairman FBR on the current revenue position and future scenario. A brief resume of Tax Administration Reforms Program (TARP) was also given. The briefing was also attended by the board members and CEO Pakistan Revenue Automation Limited (PRAL). Chairman, FBR apprised the Minister of the plan to enhance Tax to GDP ratio by 5% over next 10 years. He focused on the reform efforts being under-taken by FBR with particular emphasis on improvement in systems and procedures through the help of technology in order to ensure that FBR becomes an efficient and transparent organisation.
Ishaq Dar lauded the efforts of the Federal Board towards collection of higher targets of revenue and emphasised the need to ensure transparency in the system and to provide maximum facilitation to the tax payers at all levels. He also stressed the need to provide adequate incentives to the agricultural sector so as to achieve food security for the country.
Dar emphasised the need of introduction of measures in the forthcoming budget that would lead to introduction of an equitable system of tax wherein relief is provided to the poorer classes. He stressed that need for balancing the fiscal and monetary policy which, due to mismanagement in the past, had resulted in distortions in the economy. The Finance Minister also required of the Federal Board to remove anomalies in taxation system.
The Finance Minister also urged the board members to formulate policies for the forthcoming budget in consonance with the aspirations of the people and agenda of the popularly elected government, the FBR added.
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