'No loans needed if tax-to-GDP ratio increases to 13 percent': FBR chief tells PCGA executive committee

Chairman Federal Board of Revenue (FBR) Tariq Bajwa has said that there would be no need of foreign loans and borrowing from bank if the tax-to-GDP ratio will be increased to 13 percent. During the current year tax-to-GDP ratio has declined despite an increase in tax rates.
He stated this while addressing the meeting of executive committee of Pakistan Cotton Ginners Association (PCGA), chaired by Mukhtar Ahmed Khan Baloch here on Wednesday. He said that FBR had paid more than 20 billion rupees to 22,000 small and medium enterprises (SMEs) while refunds of Textile sector would be completed till September 30.
He further said Nadra had designed an impressive card for taxpayers and they would be entitled to pay concessional tax on the purchase of cars and non-payment of withholding tax on the purchase of property. He said the government has decided to impose maximum tax on non-filers and granting concession in taxes to filers and this difference would be widened in due course of time.
He said that around 35,000 people filed their declaration during current fiscal year, and assured that investigation and intelligence officers would establish their camp office in Multan for the disposal of cases of South Punjab. The FBR chairman said that top 10,000 retailers would be brought into the tax net under the new scheme proposed through Finance Bill 2014-15.
"At present 2.5 million retailers are operating in the country and only 8,000 are registered with the sales tax department. The government has initially set the target of bringing top 10,000 retailers into the tax net," he added. He said a new scheme for the retailers has been drafted in consultation with the relevant trade bodies of retailers. Under the new scheme, the Tax department would register the retailers in chain stores, shops in air conditioned buildings and those accepting credit and debit cards with the Tax department. Two tier regimes for sales tax had been proposed for retailers. The first tier shall comprise retailers who are part of national or international chains, or are located in air conditioned shopping malls, or have credit or debit card machines, or having electricity bill exceeding Rs 50,000 per month for the past 12 months. They will be required to pay sales tax under the normal regime and to install Electronic Cash Registers.
The remaining retailers shall fall in the second tier, who will be charged sales tax through their electricity bills at the following rates - five percent of monthly electricity bill up to Rs 20,000 and 7.5 percent of monthly electricity bill above Rs 20,000.
He admitted that FBR is not going to collect even Rs 2000 billion against the target of Rs 2381 billion fixed in budget 2012-13, thus creating a serious problem for the new government in its very initial days. He stressed the need for making concrete efforts to impose fiscal discipline, reduce inflation and induce economic growth.
According to latest estimates issued by International Monetary Fund (IMF) "considering the size and magnitude of Pakistan's public debt, a high fiscal deficit is inevitable, as the country's total debt and liabilities have increased to 15.1 trillion rupees, or 68.4 percent of GDP in the first quarter of the current fiscal year. FBR Chairman said that around 1.5 million people have the National Tax Number (NTN), out of which only 0.85 million pay their taxes.
The FBR chairman said the FBR has paid income tax refund of 60 billion rupees during the first eleven months of 2013-14 against 43.5 billion rupees paid in the corresponding period of previous fiscal year reflecting a handsome growth of 32 percent. When asked about tax exemptions available to the Telecom sector, a FBR member informed the committee that no exemption is available to the said sector. The FBR has not given any special tax treatment to the Telecom sector.
The meeting was also attended by Ashraf Khan, Member Inland Revenue, Hafiz Muhammad Jamil Owaisi, Chief Commissioner, Sarfraz Ahmed Waraich, Collector Customs, former chairmen of PCGA included Haji Muhammad Akram, Mahesh Kumar, Sheikh Saeed Ahmed, President of MCCI Khawaja Muhammad Usman, Khawaja Jalaluddin Roomi, former Minister for Industries, Khawaja Muhammad Iqbal, Khawaja Muhammad Fazil, Khawaja Muhammad Azam and Asif Khalil, Acting Secretary General.