ISLAMABAD:
While again ruling out a mini-budget, Prime Minister Shehbaz Sharif has instructed to seek expeditious decisions in pending tax cases in the Supreme Court of Pakistan and also improve enforcement to recoup the Rs386 billion revenue shortfall.
The government sources told The Express Tribune that the premier took at least two meetings this weekthe latest one on Fridayon the matters of the Federal Board of Revenue. He also took updates on the hiring of members of the appellate tribunals and the pending court cases aimed at finding a way out of the quagmire of growing revenue shortfall, said the sources.
The prime minister was also apprised that the tax shortfall may further widen, as there were chances that the FBR might also miss Rs957 billion target set for the month of January, said the sources.
During one of the meetings, the prime minister instructed to increase enforcement to recover at least Rs400 billion out of the projected Rs7.2 trillion tax gap to cover the revenue shortfall during July-December period, said the sources.
They said the prime minister once again stated that no additional burden would be put on the taxpayers and the FBR should double its efforts particularly after he has approved new cars and increased the financial packages of the employees.
The finance ministry informed the prime minister during the meeting that the ministry has released the budget for the FBR procurements. However, the FBR sources said, the Finance Ministry has not fully disbursed all the needed funds.
Last month, the FBR chairman had briefed the press that the tax gap the amount that the FBR should collect but remains uncollected -has been projected to further widen to Rs7.1 trillion by end of this fiscal year an increase of Rs900 billion within a year.
Rashid Langrial had said that the gap on account of sales tax amounted to Rs4.1 trillion, followed by Rs2.1 trillion in the income tax and Rs600 billion on account of custom duties.
The government was targeting 186,000 top tax evaders and the businesses to reduce the gap. However, the FBR could get only Rs378 million from 38,000 top potential income taxpayers who submitted the returns in response to tax notices.
The FBR has boasted about the tax-to-GDP ratio increasing to 10.8% in December, which is slightly higher than the IMF’s target of 10.6%.
However, the 10.8% ratio is only for the second quarter (October-December). The average tax to GDP ratio for the first half of the fiscal year was 10.2%, which was below the IMF target.
The FBR worked out the tax ratio on the basis of 2.75% economic growth rate for this fiscal year. The growth rate in the first quarter remained at only 0.9 % instead of 3% assumed for this fiscal year.
The economic growth remains subdued due to overall tough economic conditions.
The prime minister asked the FBR to request the IMF to review the tax machinery’s performance in the light of the improvement in the tax-to-GDP ratio, said the sources. The prime minister is not in favour of putting more burden and he acknowledges the adverse impact of heavy taxation on the personal incomes and businesses.
However, the prime minister has not yet done anything to lessen the burden of the salaried class, which is the worst affected segment of the society because of the taxation introduced by Prime Minister Shehbaz Sharif in June.
Meanwhile, the prime minister instructed the Attorney General for Pakistan to seek early resolution of the pending cases in the courts to recoup some of the tax shortfall. The taxpayers have challenged many controversial taxes in the courts, including levy of taxes on the immovable properties that is a provincial subject. The companies have also challenged super tax and the capital value tax.
The FBR has estimated that at least Rs100 billion can be recovered, if these cases are decided in this fiscal year.
Where the government blames the courts for a delay in decision, various court orders suggested that it was the FBR that was not actively pursuing the court cases.
The FBR’s legal council last month sought an adjournment in a tax case of M/s Pioneer Cement Limited versus the federation, which is pending since 2021, showed the court order.
“The Federation and the FBR have constantly agitated the issue of pendency of fiscal matters before the respective high courts. While such grievance is repeated time and again, however, the order herein prima facie, demonstrates the disinterest itself in proceeding with fiscal matters before this court”, reads the order of December 20th of 2024.
Similar orders have also been passed by the Singh High Court in two other cases, Faisal Rahim Saya versus the federation and M/s Techno Fabrics Private Limited versus the federation. These orders were passed last month after the FBR sought adjournments in the cases which were pending since 2020-21.
Earlier, the Prime Minister had suspended the taxmen for not actively pursuing court cases but the premier too now seems not taking any action.
Prime Minister Shehbaz Sharif on Friday directed to appoint talented manpower in the appellate tribunals to ensure the swift disposal of legal cases regarding the FBR’s revenues. The prime minister asked to look for the option of head hunting to appoint members of the appellate tribunals after the government could not attract best talent during a recent exercise.
The PM said that people of international caliber should be recruited in the tribunals offering them competitive salaries and perks in accordance with their professional capabilities.
Muslim World League
Prime Minister Shehbaz Sharif on Friday praised the Muslim World League’s (MWL) support in promoting the true identity of Islam at the global level, advocating the common goals of the Muslim world, and promoting mutual respect and understanding between religions, beliefs and cultures.
The prime minister made the remarks during a call on paid by the Secretary General of Muslim World League, Sheikh Dr. Mohammad bin Abdulkarim Al-Issa here at the Prime Minister House, a Prime Minister’s Office news release said.
He extended his gratitude to the Secretary General of MWL for the decision to establish the Sirat Museum in Pakistan and underscored the country’s vision to continue to work for the early completion of joint projects, especially the establishment of Sirat Museum.
The Secretary General thanked the Government of Pakistan for the elaborate arrangements for the International Conference on Girls’ Education in Muslim Countries and the cooperation with the MWL in this regard.
With additional input from APP
