Advisor to Prime Minister on Finance and Economic Affairs Dr Salman Shah has said that the government will reduce tax rate for corporate and SME sectors in the coming budget to improve their competitiveness. "Last year we had curtailed tax rate and it will be further slashed in the next five years."
For the salaried class the maximum slab was now 20-percent and minimum one percent, he added. "Our focus is on broadening of tax base and when the tax net expands, the tax rate automatically comes down," he said while replying newsmen's queries after attending a presentation at Regional Tax Office (RTO) on tax reforms, here on Saturday.
To a question about taxing the agriculture sector, Salman said it was a provincial subject, "but we want the provinces to expand the tax base for this sector," he maintained. "More than 80 percent revenue is collected by the federal government and we also want the provinces to increase collections and they could do this without enhancing the rate of tax."
Stressing the need for increasing the revenue generation, the advisor said: "Taxpayers are our heroes and we want every one to be our hero.'' To a question regarding increase in flour price, he said it will come down as federal and provincial governments and even private sector had sufficient stocks. About the growing price of edible oil, Shah said that the Prime Minister would take action to undo the impact of international price of palm oil. If the bill of edible oil of the poor goes up the government will provide subsidy, he revealed.
Reviewing the overall economic situation, he said: "we have to take our cement, textile, sugar sectors to hi tech now which is being done everywhere in the world to create competitiveness. Pakistan is a market economy and not only we have to compete in the world but also within our indigenous market."
The government job is to facilitate the private sector and establish industrial park etc, for them and the private sector job is to bring high quality of professionalism and innovations to compete in the changing global scenario. "We will facilitate the private sector but would not provide any subsidy." About increasing cost of energy, he said: "our energy price was at par with China and India, our main competitors."
"This year our foreign investment volume will reach $6 billion mark that will be the highest ever in our history," he claimed. Every product is growing in Pakistan that means our economy is growing. Answering a question about the looming fears of war over Iraq, he said that all economies in this region are growing and we want peace here." If peace prevails this region will become the fast growing region in the world in terms of economic growth and Pakistan would be prime beneficiary as it provides corridor for energy and logistics.
"Our economy is robust, our reserves have crossed 13.5 billion mark and we expect to achieve the figure of 14 billion dollars by the end of the year." The total size of our economy has doubled to $140 billion from $70 billion in the last few years. We project 7-8 percent growth for the next decade or so. But in this scenario we will not ignore our defence and do every thing to modernise it and make it more effective," he asserted.
Commenting on recent 10 percent increase in power tariff, the advisor said it was inevitable in view of increase in losses and input cost of Wapda. "But what we need now is to overcome the inefficiency of Wapda to bring reduction in its furnace oil import bill. With 7-8-percent growth we expect 12-13-percent growth in energy needs."
When asked if the government would consider any slash in CVT on share transactions, he said no such proposal was under consideration. However, he was confident about the completion of privatisation of process of PSO by June this year.
Earlier, addressing the function, the advisor expressed pleasure and appreciated the efforts made by CBR and its field formations. Giving a historical view of the economy he said that the county had come a long way form the brink of bankruptcy to be well placed in the international capital market, getting GDR and long-term investments etc.
He acknowledged the efforts of CBR acting as a catalyst in the public sector reforms programme. While comparing the economy of Pakistan on the global level, Salman Shah remarked that Pakistan was now equated with the fast growing economies like China and India is maintaining growth rate at 7-8 percent.
Achieving 4.5-percent growth in agriculture sector is a big task which means we have to modernise our market, resource improvement and improve wholesale and retail markets, infrastructure and human resource management etc. We need to double our growth in all sectors in every 7-8 years.
To achieve all these objectives the role of CBR is very crucial, he said. Highlighting the role of CBR, presently contributing 10-percent of the GDP, he stressed the need to improve it to 4-18 percent in next 10 years. In order to achieve this objective he said that the ongoing $150 million reforms programme in CBR is aimed at improving its systems and procedures, provision of world calls facilities to the taxpayers in the workforce along with enhancement in professional skills was a step in right direction.
Earlier, Regional Commissioner of Income Tax (RCIT) Haji Ahmed in his detailed presentation on restructuring and automation highlighted the efforts made by the department to realise the vision of modern tax machinery. He applauded the commitment and determination of the government to launch a comprehensive and all embracing programme of reforms in the CBR.
He attributed all important indicators as a testimony to the success of the regime' agenda of good governance. He said that with the introduction of USAS, policy of minimum contract with the taxpayers, disposal of pending appeals, developing human resource and automation in the department was a major shift in the policies.
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