The government is examining budget proposals to convert black economy into formal documented regime for discouraging undocumented business and transactions from next fiscal year. Talking to a select group of reporters on the conclusion of Annual Plan Co-ordination Committee (APCC) meeting on Saturday.
Revenue Division Secretary General M Abdullah Yusuf said that the upcoming budget might have some proposals to convert underground economy into formal economy, as the black economy has no future. The sectors in the informal economy should voluntarily come forward as they can develop and grow more when they are part of the formal economy.
The department is making serious efforts to formalise informal economy and encourage existing sectors as well as the informal sectors to come forward and disclose their incomes under Universal Self Assessment Scheme (USAS). He said there is a possibility that some proposals might surface for the annual budget to convert black economy into formal economy and the government might consider such points for growth in economic activity.
He said undocumented economy is the main reason behind the growth of black and under ground economy, some decision are needed to convert cash-based economy into documented economy to provide level playing filed to every one. The FBR chairman said the system and procedures have been streamlined and facilitation measures are in place for conversion of informal sector into the formal sectors.
Responding to a question, he said that there is around 20 percent annual growth in increase in tax base and the board is making efforts to maintain this momentum. It is necessary to increase revenues according to the increase in tax base.
Replying to a question on making no change in income tax and sales rates in the budget 2008-09, he said that it is a budget related issue, which would be made public when final decision would be taken after final review. A number of proposals are under consideration, but it is premature to say that which proposal would be made part of the budget.
The economy is facing pressure due to POL prices, which would impact electricity and gas prices besides increasing the cost of doing business. We need to examine the correlation among all these issues while increasing the tax base and tax revenues in the next fiscal year.
However, the government would try to reduce the cost of doing business. The country needs financial resources for the development and the required growth in revenues is a must. However, while aiming at growth in revenues, we should also keep rising inflation on mind, Yusuf added.