ISLAMABAD: Despite the rising political temperature in the Panama verdict’s aftermath, the government is considering fixing the tax collection target of Rs. 4.007 trillion for the next budget 2017-18 in a bid to ensure financial discipline.
“The IMF has assessed that the FBR can collect just over Rs. 4.007 trillion in the next budget 2017-18 on the basis of Rs. 3.5-trillion collection in the FY 2016-17 ending on June 30, 2017. Federal Minister for Finance Ishaq Dar will give ‘go ahead’ after his return from attending IMF/WB’s spring meeting in Washington D.C. this week,†official sources confirmed while talking to the media, here on Sunday.
According to the IMF’s assessment, the Federal Board of Revenue’s (FBR) collection could fetch Rs. 3.5 trillion against the actual target of Rs. 3.621 trillion for the current fiscal year, so that next year’s target could achieve Rs. 4.007 trillion through nominal growth as well as through a combination of administrative and taxation measures.
The FBR has prepared a detailed list of proposals for the next budget and big-ticket items are a continuation of super tax in the wake of the ongoing war against terrorism, especially in the context of reconstruction in the aftermath of Operation Zarb-e-Azb in the tribal areas.
“We have so far spent around $3.5 billion on Zarb-e-Azb and reconstruction efforts in tribal areas, so next budget will be aimed at consolidating the gains Pakistan achieved after rendering so many sacrifices,†said the official, adding that the government will have to allocate more than Rs. 100 billion in this head.
“The rate of super tax may be changed, but this decision will be taken by Ishaq Dar,†said the official, explaining that the rate of withholding tax for creating a difference between filer and non-filers would be deepened further in the upcoming budget. The rate of withholding tax on cash withdrawal will be enhanced in the next budget, but the exact rate will be determined in the next two weeks.
Top officials have ruled out the possibility to abolish the seventh schedule from the income tax related to a special regime for the banking sector in the budget. “It can be major move if the government decides to do away special tax regime for banking sector but its chances are very dim,†said one top official through brief SMS from abroad.
In the wake of PML-N regime completing its five-year term, some circles are suggesting fixing the tax target at less than Rs. 4 trillion, but Dar believes in setting an ambitious target; therefore, he would definitely consider crossing the psychological barrier of Rs. 4 trillion in the next budget.
Chairman Tax Reform Commission (TRC) Masood Naqvi told The News on Sunday that the government had implemented a certain proposal of TRC in the last budget and it was expected that more proposals, including changes in the laws and procedures, would be incorporated in the coming budget.
Naqvi said the TRC had recommended bringing in legislation related to the Benami transaction, which was already approved by the parliament; thus, it was expected that more recommendation would be implemented in the coming budget, he concluded.