ISLAMABAD: Finance Minister Muhammad Aurangzeb, Thursday, defended taxation measures taken in the budget for the next fiscal year and does not want anyone to object to the progressive tax system as a 10 percent tax-to-GDP ratio was simply unsustainable.
The finance minister addressing a post-budget press conference along with the State Minister for Finance and chairman Federal Board of Revenue (FBR) vowed to increase the tax-to-GDP ratio to 13 percent in two to three years as 10 percent tax-to-GDP ratio is simply not sustainable and stated that increase in petroleum levy to Rs80 per litre will not be imposed in one go and phased out as well linked in with the international oil prices.
The minister said the exemption category was maintained and top slab of 35 percent was also maintained, however, there is some change in the slab. Aurangzeb promised to bring the undocumented economy into the tax net through end-to-end digitisation.
He further stated that some changes are being brought in the tax laws and the federal budget was prepared on the basis of five principles –widening the tax base, complete digitisation of the FBR’s tax system, no should object to the progressive tax system and added that a significant increase in tax on non-filers as two or three percent increase was not the way to go, and this is the first step to remove the concept of non-filers, etc. The finance minister said retailers and wholesalers will be taxed from July 2024 as this tax should have been implemented in 2022 and all the retailers and wholesalers should have been brought into the tax net.
He said registration of retailers and wholesalers was voluntarily started in April but unfortunately, declared as a failure by everyone.
The finance minister said that virtual negotiations with the International Monetary Fund (IMF) are going on successfully and hoped the government would be moving towards an agreement for a new programme in July 2024.
He said the government had complete data as to who has how many vehicles and how many time travel of those and what amount is being paid by them.
He said steps are being taken to plug the leakages of tax and conceded enforcement remained an issue and track and trace was an example as it was envisioned to be rolled out three years ago beyond tobacco but has not been done due to some issues in the implementation. He said that there are leakages in the sales tax and the government priority is to digitise it.
The finance minister said he was consulting with the provinces how to incentivise revenue side and share the burden on devolved subjects to create fiscal space for the federal government.
He said the government has already taken a decision with regard to PWD and further steps would be taken in the coming months in this regard. He said all the exemptions would be removed gradually without any exception.
Ali Pervez Malik, the State Minister said the power sector required a surgery and reforms in the energy sectors.
The secretary finance said that over and above one percent primary surplus would be used to pay off interest payments.
The minister said roughly Rs9 trillion cash is in circulation and policy measures have been taken to deal with the cash transaction.
Copyright Business Recorder, 2024
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