Finance Minister Ishaq Dar has not reportedly agreed with the unanimous decision of the Economic Advisory Council (EAC) members that the government must get out of the business of support price and subsidies in agriculture sector. Sources in the Finance Ministry quoted Dr Ashfaq H Khan as arguing that the subsidies and support price of wheat is benefiting the big agriculturists and not the small farmers.
He suggested the government to get out of this business. However, the Finance Minister said to have argued that such a decision would offend the agriculture lobby. Additionally, the minister said the federal government has to face criticism from framers that it was indulging in provincial subject. When contacted Dr, Ashfaq said that as per Chetun House he was not supposed to comment on any issues.
A member of the EAC said transparency demands from the Finance Ministry to explain to people that how the State Bank of Pakistan (SBP) debt was retired. He said the government has only shifted borrowing from regulator to the commercial banks and consequently crowded out private sector.
The Federal Board of Revenue (FBR) also came under criticism for a complicated e-filing system with some members blaming tax officials for making the system complicated to benefit consultancy firms run by the retired tax employees. The FBR has informed the EAC that the impact of policy measures on income tax return filing is evident from the fact that the number of return filers stood at 851,199 in tax year 2014 against 756,172 returns in Tax Year 2013, reflecting an increase of 95,027 returns.
Sources told Business Recorder on Saturday that the FBR has shared the data of return filers up to February 19, 2015 with the EAC during the meeting held at the Ministry of Finance. According to the FBR data presented to the council, the number of electronically filed returns stood at 405,307 in Tax Year 2014 as compared to 346,053 in Tax Year 2013. The manually filed returns were 445,892 in Tax Year 2014 against 410,119 returns in Tax Year 2013.
The FBR has also shared the recent and ongoing tax policy initiatives for expanding the tax net and facilitating taxpayers. The FBR said that initiatives included conversion of Computerised National Identity Card (CNICs) numbers into the National Tax Number (NTN); integrated IT system for income tax and sales tax; Electronic Data Interchange (EDI) connectivity with Afghanistan and China; online transmission of exemption certificate; media campaign for taxpayers facilitation; campaign against non-compliant high net worth individuals -FIRs/attachments; multiple-sources information for broadening the tax-base; development of pre-verification system for sales tax refunds; complete rollout of Web-based One Custom (WeBOC) clearance system and development of banking module for direct payment of refunds, sources added.
Meanwhile, the EAC in its 5th meeting held here on Saturday fully endorsed Finance Minister Ishaq Dar's long standing proposal for signing a Charter of Economy by all political parties in the country. Participants of the meeting agreed that economic development of the country should be above all other considerations and remain so irrespective of the change of regimes. The meeting also developed a consensus on continued economic reforms.
The Finance Minister at the outset of the meeting welcomed the participants and gave a brief overview on the current economic profile of the country particularly highlighting developments related to the successful review of the IMF programme concluded recently and updates on the government's privatisation programme. He said the pre-budget recommendations of the last EAC meeting had been made a part of Federal Budget 2014-15, and their implementation was being actively pursued. He apprised the meeting that key EAC recommendations were incorporated in the Budget and added "we have consistently followed-up with all Ministries to ensure their timely implementation".
Finance Secretary, Dr Waqar Masood gave a presentation on the economic situation of the country and shared recent growth figures for different sectors of the economy. He also talked about developments on fiscal, monetary measures, balance of payments situation and public debt fronts during the first six months of the fiscal year 2014-15. It was discussed that inflation has been stable and economy is expected to grow around 5 percent which will be a hallmark achievement. The meeting was also apprised about the recent measures for shifting short-term borrowing towards long-term.
Federal Board of Revenue Chairman Tariq Bajwa briefed the meeting about the latest position with regard to tax collection and additional taxation measures being undertaken. He also apprised the meeting about the reform measures being carried out by the FBR to broaden the tax base and improve tax administration. Prominent economist Dr Ashfaq H Khan suggested improvement in e-filing of returns with the FBR. He said improvement in this regard would facilitate taxpayers.
The Finance Minister at this juncture invited Dr Sania Nishter to dilate on the findings of the Task Force on Social Safety Nets that had earlier been formed under the Social Sector Sub-Group of the EAC. Dr Sania stated that the task force would be submitting its final report within a month and highlighted the important findings that had emerged from the task force's deliberations to date. The task force, it may be added had been mandated to examine the existing social protection framework in the country and come with recommendations for improving targeting, efficiency and eliminating duplication and overlapping between different programmes.
Farooq Rehmatullah from the energy sub-group shared important results from some of the analytical work undertaken on the growth potential of the aviation sector in Pakistan and the preparation of an integrated energy plan. The Finance Minister highlighted the initiatives undertaken by the government to eliminate the energy side bottlenecks and said that 7,000 MW of new generation capacity would be added to the national grid till 2018.
The meeting was informed that significant reforms had taken place since the previous EAC meeting. These include strengthening exports through a multi-pronged strategy and implementation of institutional/governance reforms; review of Social Safety Net programmes to improve targeting, reduce overlap, and increase efficiency; broadening the tax base by improving registration of new taxpayers, raising the cost of non-compliance, streamlining payment process for taxpayers, and bringing High Net Worth Individuals into the tax net. A tax commission has also been established to improve collection and administration of taxes, the meeting was told. Other important reforms included ensuring operations at optimal efficiency level in energy sector PSEs through strategic private sector participation.
Concluding the meeting, the Finance Minister thanked the members for their active participation and informed that the next meeting would be held before the upcoming budget for the next year, so that input and feedback of the forum could be incorporated into budgetary proposals for next year. Senior officials of various ministries including the Ministry of Finance and prominent economic experts were among those who attended the meeting.