ISLAMABAD: Federal Finance and Revenue Minister Shaukat Tarin said on Tuesday that the government would conduct tough negotiations with the IMF for the removal of personal income tax (PIT) exemptions and make changes to its existing slices, because the wishlist could not be fully implemented.
“We have negotiated hard with the IMF in the past and it would have to be done again because the wish list cannot be implemented in full,” Federal Finance Minister Shaukat Tarin replied when asked about it. the submission of the PIT Bill to Parliament as demanded by the IMF after attending a Rs 53 million prize announcement ceremony among 1,007 winners through a ballot on the QR code receipt generated by point of sale (POS) here at FBR headquarters on Tuesday evening.
To another question on the POL price increases, he replied that the prices would be revised upwards but that the exact decision would be transmitted late at night. It is pertinent to mention here that the IMF in its recent review report wrote that the government would initiate the processing of the PIT Bill before Parliament by the end of February 2022. In the past, the IMF had asked Islamabad to fetch 160 billion rupees through PIT Reforms but Finance Minister Shaukat Tarin had refused to implement them in the last budget 2021-22.
Earlier, in his address at the POS awards announcement ceremony, Shaukat Tarin said that Pakistan cannot achieve inclusive and long-term growth with the current low level of tax to GDP ratio of 10%.
“Pakistan has failed to achieve sustained long-term growth mainly due to three major reasons, including low savings rate, gaping gap between exports and imports, and low agricultural productivity,” he said. he said, adding that to achieve growth above 6%, the government must increase the tax-to-GDP ratio to 20%.
China’s tax-to-GDP ratio stood at 40 percent while Turkey and Thailand also achieved higher tax-to-GDP ratios, so Pakistan should overcome its loopholes to improve its taxation, he said. he declares.
He warned that the government would take action against those who deducted general sales tax (GST) from customers but pocketed the amount deducted. Although he does not want any form of harassment, he called on all retailers to deposit the amount deducted into the national kitty.
He lamented that out of 220 million people, there are only 3 million filers and one million returns filed just to avoid charging full withholding taxes. So there are only 2 million taxpayers. He said the German finance minister told him that there was no representation without taxation, but Pakistani culture was quite different. Pakistan’s tax base was quite low and the country was lagging behind. There should only be two major taxes, including income tax and the second consumption tax known as GST. “There is no shortcut and it is necessary to remove other taxes, for example in the form of different withholding taxes,” he added.
Dwelling on GST, he said GST should be imposed as Value Added Tax (VAT) where the supply chain from manufacturers, wholesalers and retailers should be brought into the tax net . Finally, the tax is charged to customers on the basis of consumption but he admitted that the supply chain was broken halfway. Retailers do not pay full taxes, he added.
Now the FBR, he said, has integrated Tier 1 retailers with point-of-sale machines, and all customers must get authentic receipts integrated from them.
The total retail sale was Rs 20 trillion, of which the captured sale was only 20% or Rs 3-4 trillion only and the country’s tax to GDP ratio hovered just at 10%.
The country’s current expenditure was 12-14% of GDP, so tax revenue cannot even meet spending needs. With the help of non-tax revenue, he said the country could only meet its current expenses and the country could not achieve its development goals in such a situation. The country’s growth target of 6 to 8 percent on an annual basis cannot be achieved with a low tax-to-GDP ratio, he said, adding that the tax-to-GDP ratio should be doubled from 10 % to 20% currently. .
He said the FBR will break through the 6 trillion rupees mark in the current financial year but added that the size of the economy also stands at 60 trillion rupees.
FBR Chairman Dr. Mohammad Ashfaque said on the occasion that the number of valid receipts generated by outlets increased to 153,000 in January 2022 from 43,000 in December 2021. Mohammad Aslam of Karachi won the outstanding prize of Rs 1 million while two individuals won Prize of Rs 500,000 each by vote. One thousand customers won prizes of Rs50,000. There are four customers who won prizes of Rs 250,000 each.