While supporting the revival of wealth tax, Finance Minister Asad Umar said on Tuesday that the government is considering announcing a tax amnesty scheme before the end of current fiscal year to provide yet another opportunity to the people to disclose their undisclosed local and foreign assets, while withdrawal of withholding tax on banking transactions for non-filers would also be made in the coming budget.
This disclosure was shocking for media persons because Asad Umar and Pakistan Tehreek-e-Insaf (PTI), when they were in opposition, were very critical of tax amnesty scheme and had termed it a scheme meant for looters.
An interactive session with economic reporters arranged by his office was seemingly for this purpose and the finance minister was accompanied by Minister of State for Revenue Hammad Azhar and Advisor to Ministry of Finance Dr Khaqan Najeeb. The minister said it is also under consideration to allow public office-holders, including politicians and bureaucrats, to avail the upcoming amnesty scheme.
The finance minister said that there was a growing demand for providing a last opportunity, which led to consideration of amnesty scheme. He stated a number of amnesty schemes were introduced despite the fact that the International Monetary Fund (IMF) and World Bank were opposed to them.
The minister stated that the compliance requirement of FATF would be taken care of when the government would announce the tax amnesty scheme.
The minister also announced that the withholding tax on banking transaction for non-filers would be abolished in the coming budget. The government, he said, would also withdraw ban on purchase of property for non- filers. "I will support restoration of wealth tax and if there is constitutional restriction, the provinces could go ahead," he said and added that the federal, Punjab and Khyber Pakhtunkhwa governments would jack up valuation rates for real estate plots and then reduce the rate of tax.
The minister said that the government would share medium-term economic framework with the National Assembly Standing Committee on Finance as well as with media but the figures of macroeconomic framework would not be part of it because they would be finalised in upcoming parleys with the IMF.
The finance minister rejected the impression that dollar value is currently increasing due to the deal with International Monetary Fund (IMF) and stated that there are two reasons behind current depreciation of rupee; quarterly payment to meet international obligations by end-March and speculation as well as fake news.
The minister said that net external borrowing stood at $4.2 billion during July 2018 to March 2019 as against $6.7 billion in the same period of the previous year.
The government is collecting Rs 23.3 as general sales tax and petroleum levy on per litre price of the petrol. The government would have to face a revenue shortfall of Rs 10 billion by not increasing the oil prices as recommended by the Oil and Gas Regulatory Authority (OGRA).
He said that he would propose the cabinet to change the mechanism for determining oil prices every month. The Parliament at the time of budget should set General Sales Tax (GST) rate and petroleum levy for oil prices for the complete fiscal year. Later, the OGRA should determine the prices by eliminating the role of government's ministries.
The finance minister also told the media persons that the interest payment would increase to Rs 2 trillion during ongoing fiscal year as against Rs 1.6 trillion allocated in the budget due to rupee depreciation against the US dollar.
He said that Jehangir Tareen attended the cabinet meeting on the request of Prime Minister Imran Khan to brief the meeting regarding agriculture package. The Prime Minister can invite anyone to the cabinet meeting for getting input.
The minister said that he was taking all the economic decisions in ECC (Economic Coordination Committee), ECNEC (Executive Committee of National Economic Council), CCOE (Cabinet Committee on Energy) and CCOP (Cabinet Committee on Privatisation) meetings.
He also stated that Pakistan wants to enhance its trade with neighbouring countries including India, Afghanistan and Iran. India should initiate comprehensive dialogue with Pakistan, which should also focus on Kashmir issue, Umar added.
The finance minister said that the government is approaching the IMF with an aim to take last programme for the country. He said that the government would have to enhance the exports and remittances and control the imports in order to restrict the current account deficit.
Asad Umar said that headline inflation is increasing, which is a bad sign. However, the positive thing is decline in core inflation for the first time in the last two years.
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