Finance Minister Dr Abdul Hafeez Sheikh on Friday promised to honest taxpayers that the budget would neither bring any increase in tax rates nor unpleasant surprise for them. Talking to media after a seminar "a harmonised strategy for revenue mobilisation," Hafeez said that the message for the honest taxpayers is that priority area for federal government in budget would be to simplify the tax system and increase coverage of sales tax.
Hafeez Sheikh said that constitution clearly defines provincial and federal domains in taxes and federal government respects the great deal of resources and authority transferred to the provinces under the 7th National Finance Commission (NFC) award and 18th Constitutional Amendment. The minister, however, underlined need for increased co-ordination between federation and provinces and among provincial governments to improve the taxation system with the purpose to increase expenditure in social sector and infrastructure. The better co-ordination among various tiers of government would help collect taxes in more effective manner.
In reply to a question about double taxation or overlapping in taxes at federal and provincial level, he said that such events that help gather all the stakeholders in one room would eventually lead to resolution of small irritants and issues. "We are facing these problems because of transition phase," he said, adding that provinces have been transferred additional Rs 800 billion after the implementation of 7th NFC Award.
Earlier, speaking at the seminar, he described it very timely effort needed to be praised because the country''s performance in terms of taxation was not satisfactory for policy and implantation issues. He wanted the participants to acknowledge the performance of the Federal Board of Revenue for collecting 24 percent higher tax in the first 10 months of the current fiscal year as compared to the same period of last year and described the performance as extraordinary. However, he said that tax machinery is required to improve performance in areas like coverage of sale tax, simplification of tax system and expansion in tax base.
Hafeez Sheikh claimed that the FBR has been given free hand in terms of policy and implementation and the government has always tried to put good people on top of the tax machinery with complete autonomy and zero interference. The minister maintained that neither Prime Minister, nor President or Finance Ministry have ever tried to influence the FBR. On the issue of harmonisation of taxes, he said the basic idea behind the seminar was to sit together and to discuss the way forward to improve the revenue with co-ordination at federal and provincial level. Hafeez asserted that as far as provincial taxes are concerned, it is not the desire of the federal government to be involved in their domain. He stated that agriculture is a provincial tax and provinces have to decide about it.