By: Mehtab Haider
ISLAMABAD: While urging the FBR to widen the tax base and jacking up stagnant tax-to-GDP ratio, Prime Minister Raja Pervez Ashraf, on Monday approved the proposed Amnesty Scheme that will be tabled before the Cabinet for approval in its next meeting. The money bill will be laid down in Parliament after taking coalition partners into confidence.
“As directed by President Asif Ali Zardari to get political parties and Parliament on board with regard to the proposed tax Amnesty Scheme just ahead of the upcoming general elections to avoid a controversy, the FBR has sought political support from Ashraf for tabling the money bill, amending the existing laws of income tax, sales tax and customs duty for making this scheme effective before dissolution of assemblies and establishing a caretaker setup,” top FBR officials said after a meeting with the PM on Monday.
The FBR top guns had already indicated that if the government failed to muster the required political support from the Parliament, this bill would not be tabled in Parliament as defeat in case of this bill could result in the packing up of the PPP-led government. In such a scenario, the FBR would wait for a caretaker setup then an ordinance could be promulgated for launching this scheme.
FBR Chairman Ali Arshad Hakeem informed the meeting that there was no other option available but to increase tax to GDP ratio as with existing registered taxpayers of less than one million, the status quo on the economic horizon could not be broken.
A senior official of FBR, who attended the meeting at PM House, said that Ashraf promised full backing for convincing the political parties to extend their support on these schemes.
During the meeting, Ashraf said that widening the tax base and increasing tax to GDP ratio by raising the level of collection was imperative for sustainable development in the country.
Hakeem informed the meeting that tax collection had doubled since 2008 from one trillion rupees to two trillion rupees. Also there has been an increase of 22 percent in the tax revenues this year as compared to last year.
The meeting was also informed that there were 805,000 registered taxpayers of which 260,000 people paid taxes consecutively for three years. The prime minsiter said that a taxation structure aimed at enhancing revenues should be streamlined in a manner such that a culture of voluntary tax payment is promoted.
Moreover, a large segment of Pakistan’s economy is informal, depriving the national exchequer of its due share and acting as a hindrance for economic planning and development, he said. “The menace of capital flight to tax havens has deprived the country of its true potential for development and progress,” he said.
“Demand for cars, luxury goods and housing reflects the availability of wealth in the country. Unfortunately the tax base is not commensurate to this phenomenon,” he said. Ashraf urged the FBR to plug leakage of taxes and bring elite groups of the society into the tax net. The meeting was attended by senior government officials.
Asrar Raouf, senior member, Inland Revenue Service (IRS), said that the prime minister has agreed to table the Tax Registration and Enforcement Initiative 2012 before the Cabinet.
For up to Rs5 million, the FBR will allow clearance of cash by paying Rs40,000 in the first month, Rs50,000 in the second month and Rs70,000 in the third month, he said, adding that any amount above Rs5 million will be cleared by paying one percent of the total amount in the first month, 1.25 percent in the second month and 1.75 percent in the third month.
There have been 800,000 registered taxpayers who on an average are paying Rs13,000, he said, adding that the upcoming scheme would ask them to avail this opportunity by paying at least Rs40,000.
If anyone would not avail this opportunity, then the FBR would take stern action against 3.1 million people having complete profile of non-filers and their computerised national identity cards (CNICs) would be blocked, he added.
