ISLAMABAD: Finance Minister Shaukat Tarin on Tuesday said the government would go after the wilful tax defaulters as broadening of dismally low tax-to-GDP ratio was important to increase GDP growth. While responding to the opposition members' criticism during reading of the Finance Bill 2021 in the National Assembly, the finance minister said he would accept fair criticism with an open heart "but criticism for the sake of criticism would be unfair," before reminding the opposition that the present government was clearing the economic mess of the previous governments, whether it was the current account deficit or low productivity in the agriculture sector.
The finance minister said that food inflation has increased due to low spending by the previous governments on the agriculture sector, and $20 billion current account deficit compelled the government for taking a front-loaded International Monetary Fund (IMF) programme.
Tarin said the wilful tax defaulters would be arrested following third-party audit and subsequent to his approval as Section 203 was rewritten to withdraw arrest powers from the Federal Board of Revenue (FBR).
The finance minister said that instead of the FBR, now a committee headed by himself would consider action against wilful defaulters whose tax liability would be above Rs25 million.
Around 15 million potential taxpayers whose data profile is available with the government would be gradually brought into the tax net for increasing tax-to-GDP ratio to 20 percent to enable the country to grow at 6-8 percent, he added.
Tarin said the government has rationalised the taxation.
There is only two percent tax on non-registered online e-commerce, while tax on food items such as wheat flour, milk, and chicken feed has been withdrawn.
Additionally, he said that tax on provident fund, medical, pension and internet have been withdrawn and there is no tax on cotton. The finance minister said that the government did not impose indirect tax, instead, tax rate on many items was decreased.
So to state that the government imposed indirect taxes is not factually accurate, added Tarin.
Tarin said that out of the total Rs18 trillion trade in the country, only Rs1.5 trillion was in the tax net and the government would take steps to bring, as much as possible, into the tax net.
He added that tax was being collected from consumers but was not being deposited to the government.
The finance minister said food inflation has been high during the tenure of present government because the country has become a net importer of food commodities because the agriculture sector was neglected during the previous governments.
He said that core inflation is at seven percent, the same level, which was during the previous government.
The finance minister said, to increase the productivity of the agriculture sector, "we have increased allocation to Rs63 billion in the budget for the next fiscal year compared to Rs1.6 billion in 2017-18."
The government would spend a total Rs150 billion in agriculture sector, he said, adding that the government would not depend on trickle-down approach as it adopted an intervention to provide relief to 4.6 million people through bottom-up approach.
In budget for the next fiscal year, the finance minister stated: "we are taking direct action to lessen poverty" and expressed the confidence that in few years there would be prosperity for low income group.
In the history of the country the present government has given a road map to economically support 4-6 million low-income families, which created uneasiness for the opposition, he said.
Copyright Business Recorder, 2021
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