Dr Farrukh spells out reasons behind government's FBR decision

The government is restructuring/bifurcating Federal Board of Revenue into policy and operational wings with the objectives of enhancing and rationalizing revenue collection and promoting equity and transparency in the tax machinery. This was stated by government's spokesperson on economy, energy matters Dr Farrukh Saleem at a panel of economic experts. According to him, reforms in the tax collection set up have been due for past four decades but none of the past governments took this decision.
Elaborating the new scheme of tax collection, the spokesman said that the policy wing will comprise experts taken from the private sector while implementation/operational wing will comprise regular government tax collectors.
He said the present tax collection setup had been responsible both for chalking out policy and its implementation; sadly, top brass of the FBR always took easy decisions and the revenue collection remained stagnant over the years.
The spokesman pointed out that every Pakistani has been paying indirect tax which forms 60 percent of the government collection. He said the burden of tax collection is heavily on the industrial sector which has hampered industrial growth. He also pointed out that on the other side, the agriculture sector contributes 20 percent to GDP but its share in tax collection is only one percent.
Dr Farrukh Saleem said that out of annual revenues of about Rs 4,000 billion, 193 state enterprises, including PIA and Steel Mills, cause a loss of Rs 1100 billion to the national exchequer. If we reduce this loss by 50 percent and also reduce the circular debt, we need not put extra burden on the taxpayers.
In reply to a question, he said the government could not privatise PIA since its liabilities are of Rs 400 billion against its assets of Rs 150 billion, therefore no one is going to buy it.
The spokesman said that for economic revival the government is setting up "Sarmaya Pakistan Company" to revive 193 state entities.
He said the PTI government has divided 193 sick enterprises into three categories - those could be privatized; second, those could be revived/turned around for privatisation and those should be shut down.
The government has been holding talks with All Pakistan Textile Mills Association for one month and assured them that the government would provide zero-rated regime for five export sectors, including textile, carpet, surgical instruments and sports goods. APTMA has assured the government that it would revive 100 out of 200 closed down textile units in three to six months.
According to him, after arrangements with Saudi Arabia, China and the UAE, there is no threat of default. He said negotiations with the IMF are ongoing and international financial institution has suggested some reforms to stabilise our economy.