ISLAMABAD: Finance Minister Muhammad Aurangzeb, Tuesday, disclosed that people are ready to pay more money (tax), but they are not ready to deal or interact with the tax authority, the Federal Board of Revenue (FBR).
During review of the Tax Laws (Amendment) Bill, 2024, in the Senate Standing Committee on Finance, here on Tuesday at the Parliament House, the finance minister stated that the credibility and trust in the tax authority needs to be restored.
“A lot of people come to us and tell us that we will contribute more money (tax) in the national kitty, but we do not want to interact with the tax authority. Restoring credibility and trust in the tax authorities will start with the FBR. It is not possible that you are a citizen of Pakistan and you do not want to deal with the tax authority,” he stated.
Senate panel to consider tax laws bill today
The committee meeting was attended by its Chairman Senator Saleem Mandviwalla and two senators from the Pakistan Tehreek-e-Insaf (PTI) i.e. Mohsin Aziz and Shibli Faraz. The committee reviewed the sales tax provisions of the proposed bill and reading would continue in the next meeting of the committee.
According to the finance minister, under the transformation plan of the FBR, top priority has been given to restore confidence and trust in the tax authority. The use of technology is the most important component of the FBR’s transformation plan.
Aurangzeb stated that the element of corruption and harassment would be eliminated under the transformation plan. This is one aspect of the issue, but the most important objective of the Tax Laws (Amendment) Bill, 2024, is how to broaden the tax base.
The revenue leakage as well as under-filing would be captured through this new bill. “My sympathy with the salaried class is also because I am paying high tax like super tax/CVT on salaried income”, he said. We have to rationalise the tax structure on salaried class by bringing those segments of the society into the tax net, who are not paying taxes. Under Tax Laws (Amendment) Bill, 2024, this is one way to register these people through higher compliance, he added.
Rightsizing of the federal government in all ministries is also underway and update in January 2025 that how to reduce the size of the federal government, he said.
Aurangzeb stated that the Policy Unit would be excluded from the FBR, so that the tax machinery should focus on tax collection. The Tax Policy Unit would be established in the next six months.
FBR Chairman Rashid Mahmood Langrial stated that the Tax Policy Unit would analyse the implications of the taxes imposed by the FBR. The experts of the Tax Policy Unit would continue data analysis to review impact of tax rates under the broader economic picture of the country. The tax policy is not the function of the tax official as my function is to collect taxes, the FBR chairman added.
The FBR chairman said that today we are not here before the committee to raise taxes or impose new taxes, but to resolve the issue where we were forced to increase tax rates. The bill would resolve the issue of non-filing or under-filing of returns.
He clarified that 95 percent of the households would be not affected by the Tax Laws (Amendment) Bill, 2024.
The finance minister was confident that the Tax Laws (Amendment) Bill, 2024, would play an important role for taking the tax-to-GDP ratio from existing 10.3 percent to 13 percent in the next five years. The tax-to GDP ratio of our neighbouring country stand at 18 percent.
The finance minister said that government has interacted with associations including retailers and wholesalers and it is very clear that everyone has to contribute to this economy.
In case we fail to collect taxes from non-compliance sector then what we will do in the next budget. Whether we will again increase taxes on already overburdened taxpayers such as the manufacturing sector and salaried class? he raised question.
Copyright Business Recorder, 2024
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