Preparing FBR policies, next year's budget: 14-member 'national tax committee' to be constituted, says Tarin

Advisor to Prime Minister on Finance Shaukat Tarin has said that a 14-member 'national tax committee' will be constituted soon to prepare Federal Board of Revenue (FBR) policies and help in preparing budget for the next year. Addressing a meeting of Site Association of Industry (SAI) on Saturday evening, he said that the committee would comprise four ministers and 10 representatives of business community.
He said that the government was also preparing agriculture and industrial policies on priority basis, while gas and petroleum policy would be announced soon. He said that agriculture and industrial policies would be prepared in consultation with all stakeholders. He said that the government was concentrating on nine areas for boosting economic activities and improving living standard of general public.
The nine areas include stability of macro economic sector, security of the people, manufacturing sector, agriculture sector, human development including health and education, integrated energy plan, stability of stock market and services.
The Advisor, quoting a study, said that Pakistan has 150 TCF gas, 40 billion barrels of oil and 180 billion tons of coal reserves. Still Pakistan is facing energy crisis. Gas and petroleum policy envisages proper utilisation of reserves and making investment in this sector.
Regarding demand of reduction in oil prices, he said that oil prices were reduced in the country from Rs 87 per litre Rs 57 per litre. About further reduction in oil prices, he said that the government issuing some amount to reduce its trade deficit. "We are trying to bring down inflation and interest rates to single digit.
Referring to 22 percent increase in power tariff, he said that Nepra had recommended 62 percent increase in power tariff, with which the government did not agree, and allowed only 22 percent increase. He said that Wapda supplies around 700 mw daily to KESC whereas KESC has more than Rs 2 billion due to Wapda and was making no payment. Pakistan can not afford inefficiency of Discos, he added.
The Advisor said that oil companies' outstanding against Pepco is around Rs one billion, whereas dues against KESC are Rs 75 billion, FATA Rs 80 billion and provincial governments Rs 19 billion. He held previous governments responsible for present economic crisis and said that when oil prices increased in the world market its impact was neither passed on to the consumers nor reduced government expenses. Instead of these measures government borrowed from State Bank that created inflation.
Disagreeing with business community that bank rates the world over ranged between 2 percent and 3 percent, he said that no bank could survive on this spread in the world. Bank spread ranges from 12.5 percent to 13 percent. However, he admitted that some of the banks in Pakistan were charging unjustified rate. This is a bad year for banking sector, he added.
Regarding IMF, he said that it is 23 months program and the government was meeting all its targets. He said that the biggest challenge is from government revenue targets. FBR must follow those who have income but were not paying taxes. Manufacturing sector is showing 6.2 percent negative growth, he added.
"We have to increase tax net and bring all those sectors into tax net which are still out of tax regime. We are trying to increase tax-to-GDP ratio to 15 percent. Tax-to-GDP ratio in Turkey is 18 percent, India 14 percent and Malaysia 21 percent", he said.
Referring to the prices of commodities in international market, he said that price cut benefits were not being passed on to general consumers. He said that he has called an emergency meeting of all provincial chief secretaries in Islamabad to take strict measures against those not following government instruction and not passing on price benefits to consumers.
SAI Chairman M A Jabbar said that the central bank was working under purely theoretical approach that single prescription of increasing the discount rates to reduce inflation will work and but that never worked as the increase of the discount rates continues without any interruption and disruption for many years. He said today industries are hard hit by inflation increasing cost of financing.