Finance Minister Asad Umar and his team on Saturday almost finalised medium-term economic framework of the present government, focusing on measures to bring about reforms in the economy with emphasis on growth in exports and revival of business, as it will be presented in the National Assembly on January 23. Sources in the Finance Ministry said that the meeting on budgetary mid-term economic framework was attended by secretary finance, governor State Bank of Pakistan (SBP), chairman Federal Board of Revenue, secretary Economic Affairs Division and director general Economic Reforms Unit.
When contacted, spokesman for Finance Ministry Khaqan Najeeb told Business Recorder that the government would present investment and export package in the National Assembly on January 23 that would help businesses through substantial reduction in cost of raw material for industrial sector. The package would also include measures to simplify the process and procedure as well as reduce cost of doing small and medium businesses.
Najeeb further stated the government would also remove anomalies in withholding tax for filers and non-filers. He further stated that package has been finalised in consultations with Ministry of Commerce and the Federal Board of Revenue (FBR) to revive industrialisation in the country, he concluded. The meeting continued for hours to discuss the broader contours of the finance amendment bill as the government has been struggling to mobilise tax collection of the FBR that is facing shortfall of around Rs 170 billion during the first half of the current fiscal year.
Sources said that senior officials of the Finance Ministry also held a meeting with the Members of the FBR - Inland Revenue and Customs and Operations - in the first week of the ongoing month to discuss projection of the tax collection for finance amendment bill and measures to realise the target. They added the government would also announces measures in the finance bill for compression of imports as the rising imports are a challenge to deal with the problems on external account as impact of previous measures was below the government's expectations.
Sources further stated the government's primary focus in the budget would be on high end earners to increase revenue collection and for this, targeted measures would be undertaken and some of the proposals under FBR's consideration are increase in sales tax on petroleum products, raise in excise duty on cigarettes, cement, beverages and vehicles (1800cc and above), increase in the rate of additional customs duty - from 2 to 3 percent - on imports across the board and further increase in the rate of withholding taxes for non-filers. However, sources said that the government may reduce the withholding tax on banking transactions for filers given the reduction in deposits of banks. There is also a possibility of standard 17 percent rate for a couple of sectors where lower rates or special tax rates are applicable.
The proposal to raise additional customs duty from 2 to 3 percent on imports may generate revenue while excise duty on commodities is also under consideration to discourage imports and mobilise revenue.
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