LAHORE: Special Assistant to Prime Minister (SAPMA) on Revenue Dr Waqar Masood has said that the budget 2021-22 has a focus on doing away with exemptions and withdrawing incentives to generate additional revenue of Rs250 billion.
Talking to the Business Recorder, he said the Federal Board of Revenue (FBR) has also introduced relief measures on the side of customs, sales tax, federal excise duty and income tax. The prime focus is to ensure relief to the daily life of a common man, he added. He negated the impression that the government has imposed new taxes, saying that the government has only withdrawn a few exemptions and incentives to the elites of the country. According to him, the objective is to expand the tax net and bring privileged class to the scope of revenue generation.
He said a concerted effort has been made to reduce the number of exemptions, as the whole income tax law is a composition of two things: imposition of taxes in the first part and exemptions from those taxes in the later part. He said only withdrawal of tax concessions and privileges of elite can ensure growth and relief to the people.
Dr Masood pointed out that a World Bank sponsored study on the tax system of Pakistan indicates that the government was doling out Rs1,300 billion in tax concessions and tax breaks to the uppermost and richest income group in the country. Pakistan can only get out of the economic quagmire if this huge amount of tax exemptions and reliefs are largely withdrawn, he asserted.
According to him, the government is facing the challenge of generating an additional Rs610 billion of revenue, as the petroleum levy had reduced to an average of Rs8 per litre during the last part of the current fiscal year against Rs30 per litre during the first part of it. However, he said that a decrease in oil prices is very much likely after lifting of sanctions on Iran. Besides, Saudi oil facility would also be helpful to Pakistan in this regard, he added.
He said the government has introduced progressive tax measures to reduce tax relieves and privileges enjoyed by the elite. This will include a transition to taxation of total income and not blocs of income separately, a more progressive personal income tax system with a higher exemption limit and only five to six slabs.
In order to ensure relief to common man in the budget, he said the government has reduced additional customs duty (ACD) on goods falling under 2436 tariff lines pertaining to 20% customs duty slab from 7% to 6%. Also, he said the government has extended exemption from customs duties on import of COVID-19 related items for further six month.
He said the government has also exempted customs duty (CD) and ACD on inputs of Ready-to-Use Supplementary Food (RUSF) and Ready-to Use Therapeutic Food (RUTF) besides six life-saving drugs.
Also, he said, the government has enhanced the value of unsolicited gifts through post or courier from Rs20,000 to Rs30,000 and exempted CD & ACD on import of grain storage hermetic bags and cocoons. Rationalization of tariff structure on auto sector is another salient feature of the budget for relief to a common man, he added.
Copyright Business Recorder, 2021