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Govt wants toexpand tax net,cut rate: Shaukat

RECORDER REPORT

KARACHI: The Federal Finance Minister, Shaukat Aziz, has said that there will be only three taxes in the next budget, namely, income tax, sales tax and customs duty. The government intends to reduce the tax rate and at the same time expand the tax net from the next financial year.

Addressing collectors and officers of customs at the Karachi Custom House on Tuesday he said that the ratio of tax to the GDP of Pakistan was the lowest in the world. The finance ministry was starting surveys to find out why people were shy of coming into the tax net. However, if they did not come voluntarily the government would take stern action against them, he added.

The Minister exhorted the CBR officers to take care of the government's revenue collection, which was entirely in their hands. The size of black economy was tremendous in this country and it was the job of tax collectors to take measures for documentation of the economy by expanding the present narrow tax base. All efforts should be concentrated on new tax-payers.

Shaukat Aziz told the customs officers that export was top priority of the government because increase in exports would add to progress and prosperity of the country. "Customs has a big role in creating facilitations for exports. Don't take this as an opportunity to create obstacles or to enrich yourself but take it as a job to enrich the country," he advised the customs officers.

He pointed out that increasing export and self-reliance were the only means to achieve political sovereignty. The country should be financially strong so that no power could exert pressure on us, he said.

He said that there were some positive signs of improvement in the economy but the road to prosperity was very long and we could achieve the goal of progress and prosperity only through dedication and hard work. In this connection, he referred to the stability in exchange rate, lowering of interest rates and low inflation rate.

Shaukat Aziz listed smuggling, under-invoicing of imports as two major ills which were causing revenue loss to the government and adversely affecting local industries. The Chief Executive has formed a high-powered committee to check smuggling that would not only take measures to increase physical vigilance but would take stern action against retailers selling smuggled goods after a certain period of amnesty.

Another major source of smuggling of goods, he said, was bonded warehouses which also included diplomatic bonds. The committee was framing an action plan against the misuse of these warehouses. He asked Customs officers to take measures to check over-invoicing of imports, a major source of leakage of revenue.

Shaukat Aziz said that the government was not supposed to indulge in commercial activities and would privatise all commercial organisations and banks. The proceeds would be used to reduce government's debt burden. The government has reduced the rate of interest in order to have some relief on payment of domestic debts whose servicing charges are more than the defence expenditure.

The minister lauded the installation of scanning machines at the airports to check luggage of the passengers and instructed the customs officers to ensure that VIPs' luggage should be subjected to scanning similar to ordinary passenger. There should be no dual law, one for the people and another for the privileged ones.

He exhorted the Customs officers to improve their PR because their image was worse than the reality. Customs came next to police in the matter of low prestige, he commented. Referring to the reports about rightsizing in the CBR, the minister said that to remove the inefficient and corrupt from any organisation, was not a new phenomenon. Those who were honest and were working nicely should not be worried.

Shaukat Aziz lauded the new series of improvements in procedures, especially automation of customs procedures, and said that the ministry had approved an additional grant for Pakistan Revenue Automation Ltd., which was computerising customs and other CBR departments. He pointed to the limited fiscal space available with the government and said more revenue collected by the collectors would be used for development of education, health and roads.

Earlier Collector of Customs (Appraisement) Dr. Manzoor Ahmed; Collector of Customs (Preventive) Zafar Iqbal; Collector of Customs (Export) Munir Qureshi and Director General of Valuation Abdul Wahid made presentations to explain the working and achievements of their departments.

The minister, who was on his first visit to the Custom House showed keen interest in the presentations and asked questions about measures to facilitate exports and to check leakage of revenue through over-invoicing of imports and under-invoicing of exports.Mir. Fuad Ali, Member (Customs) CBR, thanked the minister and assured him that the customs officers will strive hard to implement his instructions to maximise the revenue collection. The Central Board of Revenue chairman was also present on the occasion.