Expert says country would not default

KARACHI: Minister of State for Revenue, Ashfaq Tola, confidently stated that Pakistan would not default on its financial obligations, dispelling all rumours and concerns.

Speaking at the Korangi Association of Trade and Industry (KATI), Tola emphasised that out of the allocated budget of 9,200 billion rupees, a significant portion of 9 trillion rupees could be collected without difficulty.

He assured the audience that the government had taken measures to provide historic relief to small businesses through the budget while acknowledging that the auto and electronics sectors were facing the most significant challenges.

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Tola further clarified that the government had not introduced any tax amnesty scheme in the budget and that any ambiguity related to such a scheme would be resolved before the International Monetary Fund (IMF).

The Minister of State lamented the dominance of the cash trade system in Pakistan, highlighting that only 3% of the population was currently contributing 90% of the tax revenue.

He stressed the budget had been meticulously designed, considering the needs and circumstances of various sectors. He also criticised the previous government for the negative impact caused by the suspension of the China-Pakistan Economic Corridor (CPEC) program.

However, KATI President Faraz-ur-Rehman emphasised the necessity of expanding the tax net to stimulate economic growth. He called for the government’s intervention in controlling the value of the national currency and pointed out the ongoing challenges faced by the business community, including delayed customs clearance and persistent shortages of raw materials.

Zubair Chhaya, Deputy Patron-in-Chief of KATI, expressed concerns about the increase in withholding tax and the complex tax regime, which instilled fear among taxpayers.

He called for clarity regarding the distinction between filers and non-filers, asserting that tax savings for filers often ended up being spent on responding to tax-related notices.

In addition, Tariq Yusuf, President of the Karachi Chamber, criticised the government’s traditional budget, claiming that it perpetuated the same old formulas.

He argued that those already paying taxes were burdened further, while non-filers enjoyed exemptions. Yusuf further lamented the complexities of the tax system, which deterred potential taxpayers.

Asif Haroon, a partner at AF Ferguson, shed light on various tax measures implemented by the government. He discussed the introduction of the super tax in 2015 and its subsequent re-introduction last year through the Finance Act of 2022.

Haroon explained that the tax rate had increased to 6-10% for incomes exceeding 350 million rupees, and this year it would be imposed on incomes above 500 million rupees.

He also outlined other tax changes, including increased shareholder taxes on bonus shares and levies for non-filers withdrawing significant amounts from banks.

Copyright Business Recorder, 2023