LAHORE FEDERAL Finance Minister Dr Abdul Hafeez Sheikh has said that the focus of the government in the next budget will be on equitable taxation and every effort will be made to bring tax evaders into the tax net. He was addressing a pre-budget seminar organised by an English language daily here on Sunday. The seminar was also addressed by Governor State Bank of Pakistan Shahid Hafeez Kardar, Deputy Chairman Planning Commission Dr Nadeemul Haq and three former Federal Finance Ministers Sartaj Aziz, namely Dr Salman Shah and Shaukat Tareen. Abdul Hafeez Sheikh said changing the current governance pattern in Pakistan was difficult but a steady progress in this regard was going on. He conceded that the state apparatus had dominated society in Pakistan and cumbersome rules gave bureaucracy an upper hand. He said dismantling the hold of bureaucracy needed active participation of the civil society. The finance minister said that agriculture tax was a provincial matter, however, the federal government could collect it on behalf of the provinces if they desired and authorized it to collect and deposit it in their account. An alternative, he added, was to make amendment to the constitution, giving the federal government authority to collect income tax on agricultural income. He said the country remained at war or in preparation of war throughout its history which had affects on economy and allocation of resources for other sectors. Budget is not made in vacuum, he said, adding that the planners had to strike a balance and look into the eyes of the powerful to deny their demands. Moreover, he added, tax culture had not yet developed in the country. Abdul Hafeez Sheikh said political instability along with unstable economic policies had denied the country opportunity for sustained growth. He said budget-making had become more difficult for the federal government after parting with Rs300 billion that had been given additionally to the provinces. He said the present regime did bring down the budget deficit from 7.4 percent of the GDP it inherited from previous regime and was hoping to bring it down to 4.5 percent this year but the impact of floods was beyond the control of the government. However, he added, that the coalition government did take some bold steps like doing away with exemptions on fertilizers, textile and leather. Dr Sheikh assured the businessmen that the rate of existing taxes would not be enhanced. However, he said, that the decrease in the GST rate would not be possible due to the huge gap between expenditure and resources. He said ever since he took over, efforts had been made to strengthen institutions. He said the Planning Commission would formulate the growth strategy that would be followed by the government. The Federal Board of Revenue, he added, had been given autonomy to nab tax evaders irrespective of their status. He said the FBR chairman had transferred 100 influential officials recently and no pressure was exerted on him to cancel even one transfer. He said the FBR chairman also identified 4,000 companies -many highly reputed involved in obtaining fake refund amounting to Rs7.5 billion. FIRs against all of them were registered irrespective of their political influence, he said, adding that Rs1.25 billion had been recovered and the remaining parties had promised to pay back requesting the FBR not to prosecute them. He said transparency had been restored in taxation system. Shahid Kardar said inflation was a major concern for the central bank. He said a recent survey of 1,086 enterprises revealed that the majority was increasing prices after every 3-4 months due to inflation. He said the gap between resources and expenses was widening. He said the terms of trade had changed as many sectors of economy having tax potential were under the domain of the provinces. However, he added, the federal government had to bear the brunt of expenses that had increased like in defence spending, debt servicing and subsidies of power and food. He said the government had crowded out credit for private sector. He said private sector credit uptake increased by 2.1 percent in 2009, 3.1 percent in 2010 and 3.5 percent in 2011. The government borrowing, he added, increased during the period by 60 percent in 2009, 22 percent in 2010 and 30.5 percent in 2011. The government borrowing has reached Rs678 billion this year, he said, adding that currency in circulation was Rs1.53 trillion or 32 percent of the deposits. He said currency in circulation had increased by 38 percent Read More: http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=48507&Cat=5&dt=5/23/2011
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