ISLAMABAD: The High Powered Committee urged the Federal Board of Revenue (FBR) to speed up process to differentiate between investment and business friendly and damaging tax exemptions.
Different governments have been granting tax exemptions through SROs to benefit a specified sector or group of people. These SROs have been main source of loss to national kitty in the form of shortfall of revenue collection.
In the budget for FY 2014-15, the Minister said, concessions / exemptions amounting to Rs. 104 billion were withdrawn.
A well placed source at FBR told this scribe here that the committee met with Finance Minister Ishaq Dar in the chair and stressed on FBR to keep business friendly tax exemptions intact and elimination of those tax exemptions which had been moved for the benefit of few blue eyed groups or individuals.
The committee pressed, those tax exemptions must be eliminated which were for the benefit of elite as well as tax exemptions related to public welfare and business promoting should not be discarded.
The committee further asked the concerned departments of FBR to continue discussion to refine budgetary proposals for the upcoming budget 2015-16 in one month’s time. In this connection the committee further observed that FBR should gear up speed of data collection from its wings. After data collection, FBR must share the said data with the committee to enable it to come to some sane and logical conclusion.
Earlier, while briefing to the high powered committee as part of budgetary preparation process, Member Customs Nisar Muhammad Khan and Amjad Zubair Tiwana apprised the committee about efforts and measures taken by the respective wings for elimination of tax exemptions.
Nisar Muhammad Khan presented details about proposed list of eliminating tax exemptions including Sales Tax and Customs Duty. While Amjad Zubair Tiwana presented his presentation before the committee about proposed tax exemption related to Income Tax.
This briefing was important because Chairman FBR is LEADING a six member delegation is leaving to Turkey on Saturday on a five day visit. Finance Minister, Commerce, Planning and Development, Chairman National Tariff commission, Presidents of Chambers of Commerce, Chairman FBR along with Member In-Land Revenue-Operations and others were also present.
Speaking on the occasion FBR Chairman observed that all the tax exemptions would be withdrawn within three years as the total exemptions reached Rs 480 billion and this step would help enhance over all tax collection. He proposed the withdrawal of 0.9%t to 1 percent of GDP from the tax exemption during the next budget which would help for materializing additional Rs 240 billion of revenue collection in the country.
It is pertinent to note here that Finance Minister Ishaq Dar in his budget speech last year said the tax regime would be simplified and inequities created by SRO based concessions and distortionary provisions would be removed through a phased plan, adding, the tax revenues will be increased so as to improve the Tax to GDP ratio.
He said a high-powered committee approved by Prime Minister Muhammad Nawaz Sharif diligently reviewed and extensively deliberated on the entire concessionary regime on the basis of principles developed after broad-based consultations.
The committee, which included representatives of trade and industry recommended phasing out of the concessions over a period of three years, which the Prime Minister has approved, he added.