National Assembly's Standing Committee on Finance has termed the $20 billion trade deficit during eight months of the current fiscal year as "scary" for the economy as well as balance of payment position (BoP), calling for a commission to establish the reasons of continuous decline in -s.
A meeting of the committee was held here on Thursday under the chairmanship of Qaiser Ahmed Sheikh to discuss the budgetary proposals in consultation with chambers of commerce for presenting to the government for incorporation in the budget 2017-18. Members of the committee pointed towards grave challenges and showed concerns on decline in exports and on rising trade deficit and debt.
Dr Nafeesa Shah stated that there was a need to set up a special committee or government should establish a commission to determine the causes of decline in exports because "$20 billion trade deficit was very scary".
She added the most alarming factor for Pakistan's economy was a declining trend of agriculture sector - a backbone of the country's economy. There was lots of news in recent months of Chinese investment to Pakistan, she said, asking: "we would like to know the details of Foreign Direct Investment (FDI) inflows as well as outflows during the tenure of the current government".
Asad Umar stated that tax system has made country's economy uncompetitive and without addressing this fundamental issue the economy can not be put on path of growth. He further stated that there was some increase in tax to GDP ratio during the last three years but it was primarily because of indirect taxes including withholding tax, whose share in the total taxes has increased to 87 percent while direct taxes share has decreased.
"We would like to hear from the FBR chairman as to what steps were taken during the last three years to reform the tax machinery," he stated. Asad Umar Abdul Rashid Godil pointed out that there was a revenue shortfall of Rs 180 billion up till now in the current fiscal year.
Chairman Federal Board of Revenue (FBR) Dr Irshad Ahmed reacted strongly to the allegation of corruption on the officials of FBR and stated that the Board is a collecting agency of taxes which were approved by the Parliament. He said the bashing of the institution was unfair due to few black sheep which also exist on the other side, referring to the taxpayers.
Chairman FBR said that there was an increase of 7 percent in revenue collection during the current fiscal year compared to the same period of last fiscal year, as revenue collection was Rs 1921 billion during last fiscal year while this year it is Rs 2054 billion against the annul target of Rs 3621 billion.
Representatives of Federation of Pakistan Chamber of Commerce Industry (FPCCI) complained about the pending volume of Rs180 billion and FBR contested its claim and stated that the amount was Rs 100 billion. The FBR chairman said that Rs 50 billion tax refunds were released during the current fiscal year against Rs 41 billion for the same period a year before.
The committee chairman said that non-repayment of refund was one of the biggest problems of the business community. Representatives of cotton and ginning industry stated that FBR was involved in corruption. Cotton ginners are being dispatched notices on a daily basis, they added.
The meeting was informed that the number of factories has decreased 900 from 1300 and cotton ginning industries are paying taxes to 20 departments. The committee decided to form a sub-committee on FBR-related issues.
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