ISLAMABAD:
While again ruling out a mini-budget, Prime Minister Shehbaz Sharif asked to seek speedy decisions in the pending tax cases in the Supreme Court of Pakistan and also improve law enforcement to recover the shortfall of 386 billion rupees.
Government sources told The Express Tribune that the prime minister held at least two meetings this week – the latest on Friday – on Federal Board of Revenue issues. He also took stock of the recruitment of members of the appellate tribunals and ongoing court cases aimed at finding a way out of the quagmire of growing revenue deficit, the sources said.
The Prime Minister was also informed that the fiscal deficit could widen further as there were chances that the FBR could also miss the target of Rs957 billion set for the month of January, the sources said.
During one of the meetings, the Prime Minister requested to intensify controls to recover at least 400 billion rupees from the planned tax gap of 7.2 trillion rupees to cover the revenue shortfall during the July-December period, the sources said.
They added that the Prime Minister once again said that no additional burden would be imposed on taxpayers and the FBR should step up its efforts, especially after approving new cars and increasing financial packages for employees.
The Finance Ministry informed the Prime Minister during the meeting that the ministry had released the budget for FBR procurement. However, according to FBR sources, the Finance Ministry is yet to fully disburse all the required funds.
Last month, the FBR chairman had informed the press that the tax gap – the amount the FBR is expected to collect but remains uncollected – is expected to widen further to Rs 7.1 trillion by the end of this financial year – an increase of 900 billion rupees during the year. one year.
Rashid Langrial had said the gap due to sales tax stood at Rs4.1 trillion, followed by Rs2.1 trillion under income tax and Rs600 billion under customs duties.
The government targeted 186,000 major tax evaders and businesses to narrow the gap. However, the FBR was able to obtain only Rs 378 million from 38,000 potential richest taxpayers who submitted their returns in response to the tax notices.
The FBR boasted of the increase in the tax-to-GDP ratio to 10.8% in December, which is slightly higher than the IMF target of 10.6%.
However, the ratio of 10.8% only concerns the second quarter (October-December). The average tax-to-GDP ratio for the first half of the fiscal year was 10.2 percent, which was below the IMF’s target.
The FBR calculated the tax rate based on an economic growth rate of 2.75% for this financial year. The growth rate in the first quarter remained at just 0.9% instead of the 3% expected for this fiscal year.
Economic growth remains moderate due to generally difficult economic conditions.
The Prime Minister asked the FBR to request the IMF to review the performance of the fiscal mechanism in light of the improvement in the tax-to-GDP ratio, the sources said. The Prime Minister is not in favor of an increase in charges and he recognizes the negative impact of heavy taxation on the income of individuals and businesses.
However, the Prime Minister has yet to do anything to ease the burden on the salaried class, which is the most affected section of society due to the taxation introduced by Prime Minister Shehbaz Sharif in June.
Meanwhile, the Prime Minister asked the Attorney General of Pakistan to seek early resolution of pending cases in courts to recover part of the fiscal deficit. Taxpayers have challenged many controversial taxes in court, including the imposition of taxes on real property which is a provincial subject. The companies also challenged the super tax and the capital value tax.
The FBR has estimated that at least Rs100 billion could be recovered if these cases are decided this financial year.
While the government blames the courts for the delay in the decision, various court orders suggest that it is the FBR which is not actively pursuing court cases.
The FBR’s legal counsel last month sought an adjournment in a tax case between M/s Pioneer Cement Limited and the federation, which has been pending since 2021, the court order showed.
“The Federation and the FBR have constantly agitated the issue of pendency of the tax cases before the respective high courts. Although such grievances are repeated time and again, however, the order herein presented prima facie demonstrates the disinterest itself in pursue tax matters before this court,” reads the order of December 20, 2024.
Similar orders were also passed by the Singh High Court in two other cases, Faisal Rahim Saya v. Federation and M/s Techno Fabrics Private Limited v. Federation. These orders were passed last month after the FBR sought adjournment of cases pending since 2020-21.
Previously, the Prime Minister had suspended tax officials for failing to take legal action, but now appears to be taking no action.
Prime Minister Shehbaz Sharif on Friday ordered to appoint talented staff in appellate courts to ensure speedy disposal of legal cases relating to FBR revenue. The Prime Minister has asked to consider the possibility of headhunting to appoint members of the appeal tribunals after the government failed to attract top talent in a recent exercise.
The Prime Minister said people of international caliber should be recruited into the courts, offering them competitive salaries and benefits based on their professional capabilities.
Muslim World League
Prime Minister Shehbaz Sharif on Friday welcomed the support of the Muslim World League (MWL) in promoting the true identity of Islam globally, upholding 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 telephone conversation with Secretary General of the Muslim World League, Sheikh Dr Mohammad bin Abdulkarim Al-Issa, here at the Prime Minister’s House, according to a press release from the Prime Minister’s Office .
He expressed gratitude to the MWL Secretary General for the decision to establish the Sirat Museum in Pakistan and highlighted the country’s vision to continue working for the early completion of joint projects, especially the establishment of the Sirat Museum.
The Secretary General thanked the Government of Pakistan for the arrangements made for the International Conference on Girls’ Education in Muslim Countries and for cooperation with the MWL in this regard.
With an additional contribution from the APP