Rs180bn tax exemptions to be withdrawn in 2015-16 budget

[Kabira]

ISLAMABAD: The government has decided to withdraw tax exemptions worth Rs180 billion, or 0.5 per cent of GDP, in the budget 2015-16 in a bid to bring down the deficit.
The exemptions granted through SROs currently stand at Rs483 billion. Of this, Rs104bn exemptions were withdrawn in the first phase in 2014-15 budget. The first phase of exemptions were finalised in 12 meetings which were formally submitted to the Finance Ministry in May 2014.

The SRO is an executive order, which grants tax exemptions to an individual, industry or sector. It is issued on the directive of either the finance minister, the cabinet’s Economic Coordination Committee or on a proposal by the Federal Board of Revenue.

To review modalities for withdrawing exemptions in the second phase, a meeting was held in the Federal Board of Revenue (FBR) on Friday, headed by Finance Minister Ishaq Dar. Commerce Minister Khurram Dastagir Khan and other senior officials were also present.
A source privy to the meeting told Dawn that several meetings will be held to finalise the quantum of exemptions given through SROs which will be withdrawn in the second phase.

“We are working in details to identify sectors enjoying exemptions”, the source added.
The exemptions will also include upward increase in tariff on certain products as well as change in schedules, said a source, adding the SRO exemptions to be withdrawn in the budget 2015-16 will be slightly over Rs100bn by taking into account certain sensitive sectors which needed protection.

There are areas like free trade agreements or preferential trade agreements where government has given tariff concessions to trading partners. Now, this issue can only be resolved through review of the existing treaties.
The FBR has already conducted a study on tax exemptions envisaging details of sector specific exemptions granted under Statutory Regulatory Orders (SROs). The report reveals that yearly tax exemptions enjoyed by industrialists, feudal lords and companies now amount to a staggering Rs480 billion — nearly two per cent of the country’s Gross Domestic Product (GDP).

In a statement, Finance Minister Ishaq Dar said that efforts are being made to end SRO culture. “No more exemptions for elite or privileged,” Mr Dar claimed.
Pakistan’s tax system had been riddled with distortive and discriminatory exemptions and concessions had been granted to vested groups over a long period.

Mr Dar said the first part of a comprehensive phase out plan (launched in 2013) for ending SRO/exemption culture; spread over three years had been undertaken.

In the second phase of the plan, the minister said all residual concessions/ exemptions either in the SROs or Schedules shall be withdrawn over the next year except socially sensitive concessions.
Published in Dawn, March 21st, 2015
Rs180bn tax exemptions to be withdrawn - Newspaper - DAWN.COM

 

[Kabira]

Bad news for PPP feudals.

 

[Viper0011.]

ISLAMABAD: The government has decided to withdraw tax exemptions worth Rs180 billion, or 0.5 per cent of GDP, in the budget 2015-16 in a bid to bring down the deficit.
The exemptions granted through SROs currently stand at Rs483 billion. Of this, Rs104bn exemptions were withdrawn in the first phase in 2014-15 budget. The first phase of exemptions were finalised in 12 meetings which were formally submitted to the Finance Ministry in May 2014.

In a statement, Finance Minister Ishaq Dar said that efforts are being made to end SRO culture. “No more exemptions for elite or privileged,” Mr Dar claimed.
Pakistan’s tax system had been riddled with distortive and discriminatory exemptions and concessions had been granted to vested groups over a long period.

Where are all them folks who argued with me not to long ago about how the current government won't do any tax reforms, as it benefits them and they can hide money. I back then said that the reforms are coming. Things don't happen through magic, but once the democratic system starts to work, all the mess gets cleaned up systematically.

These guys had to take care of the terrorism issue, economy, foreign investment, bring the country back to life as it was near default when they came in, had to bring some Oxygen into the system in the shape of foreign reserves, as almost little existed. Now that many of the serious issues are either better or getting better or are under decent control, they'll now start making policies towards sustainable growth and expansion of the economy, better lifestyle for average Pakistanis through creating jobs, building facilities for education, healthcare, public welfare, etc, and all of this requires fixing the tax system and associated leeway and corruption.

Another good step in the right direction!!! Pakistan as a country is about to change the course of its future and will become a much stronger economy in the near future. All it really takes, is 2 terms of democratic system to be developed and right people in right places to take the country forward!!

 

[Thəorətic Muslim]

Things don't happen through magic, but once the democratic system starts to work, all the mess gets cleaned up systematically.

Watch the next 'democratic' system undo all of these. Then retaliate by 'reforming' the tax code against P'ML'N.

 

[Viper0011.]

Watch the next 'democratic' system undo all of these. Then retaliate by 'reforming' the tax code against P'ML'N.

How about we start to live in "today" and measure someone with "today's" progress, projects, delivery and all? What these people did 20 years ago, and what someone will do 5 years from now, isn't applicable. Its gossip.

You can't discredit someone's work today, because of 20 years ago history or what might happen?? There seems to be a lot of that on this forum, you guys don't appreciate the good work being done today. You discredit it with 20 years ago past or what might happen in the future.

The system is in place, if some idiot tries to change the tax code in the future, it can be challenges in the Parliament and in the Supreme Court. I know majority of the Pakistani members here only believe in the military courts, military's rule and military's ability to grow Pakistan (Really 'effing' it down into a ditch with 0 progress for decades, to be precise), but reality is different. See the good work, appreciate it, criticize it when needed and support your country's growth.

 

[Thəorətic Muslim]

How about we start to live in "today" and measure someone with "today's" progress, projects, delivery and all? What these people did 20 years ago, and what someone will do 5 years from now, isn't applicable. Its gossip.

You can't discredit someone's work today, because of 20 years ago history or what might happen?? There seems to be a lot of that on this forum, you guys don't appreciate the good work being done today. You discredit it with 20 years ago past or what might happen in the future.

I agree with you. You'll have to crawl before you can walk.

But what work was done? RS 180 Billion in 'reforms' that clearly target a specific political block, the 'PPP'.

Tax exemptions enjoyed by feudal lords, industrialist, and companies do not equal RS 480 Billion. The majority of the land is controlled by about 12-15 families. You're welcome to read case studies about feudalism in Pakistan and how these families offer nothing productive in controlling the land.

You're welcome to research into who, which families, are making new sugar mills, concrete factories, textile mills.

You're also welcome to research who the tax payers are and which industry contributes what to the State Treasury.

The system is in place, if some idiot tries to change the tax code in the future, it can be challenges in the Parliament and in the Supreme Court. I know majority of the Pakistani members here only believe in the military courts, military's rule and military's ability to grow Pakistan (Really 'effing' it down into a ditch with 0 progress for decades, to be precise), but reality is different. See the good work, appreciate it, criticize it when needed and support your country's growth.

And who's going to stop them from changing the tax code? In '99 the Supreme Court said the Martial Law was legal, the same judges in decided that martial law is not permissible. That same court said the NRO, which pardoned hundreds of politicians from criminal and civil cases is legal?

The present government for all it's talk being the Opposition in the previous 'Democratic' government could have sent a letter to the Swiss to reinstate corruption cases against Zardari but guess who's continue the quid pro quo.

People are welcome to believe whatever they want. Whether Martial law under a General is better than 'Democratic' system. But remember this it was a General who wanted the best for his country that provided the greatest real economic growth during his short tenure. A power hungry civilian who decided to throw a wrench against a true democratic system by alleging that anyone who wanted to have Parliament temporarily move to Dhaka was a traitor.

I'll believe that Pakistan is changing to a Democratic system, that's right without parentheses, once justice is given to everyone equally.

 

[Pak_Sher]

Watch the next 'democratic' system undo all of these. Then retaliate by 'reforming' the tax code against P'ML'N.

Having a pessimistic approach is not good. Going forward governments will need to find solutions or they will be voted out like ANP and PPP.

 

[Imtiaz_Sarwar]

I hope it will improve our nations economy for the better.

 

[Kabira]

I think FBR now can collect over Rs 3 trillion next year.

 

[ziaulislam]

Where are all them folks who argued with me not to long ago about how the current government won't do any tax reforms, as it benefits them and they can hide money. I back then said that the reforms are coming. Things don't happen through magic, but once the democratic system starts to work, all the mess gets cleaned up systematically.

These guys had to take care of the terrorism issue, economy, foreign investment, bring the country back to life as it was near default when they came in, had to bring some Oxygen into the system in the shape of foreign reserves, as almost little existed. Now that many of the serious issues are either better or getting better or are under decent control, they'll now start making policies towards sustainable growth and expansion of the economy, better lifestyle for average Pakistanis through creating jobs, building facilities for education, healthcare, public welfare, etc, and all of this requires fixing the tax system and associated leeway and corruption.

Another good step in the right direction!!! Pakistan as a country is about to change the course of its future and will become a much stronger economy in the near future. All it really takes, is 2 terms of democratic system to be developed and right people in right places to take the country forward!!

if people think that with drawing a few tax exemption which will barely increase taxation by 0.5% of GDP is tax reform(that too under IMF pressure) than GOD help us!

Having a pessimistic approach is not good. Going forward governments will need to find solutions or they will be voted out like ANP and PPP.

unlikly PPPP, ANP cant get into power, the power dynamics have changed for ever after death of benazir.
PML N will have clear votes in punjab and hazra belt giving it nearly 40-45% seats(out of 55% they represent), followed by Baluchistan, it seems impossible that any other party can come into power.

 

[Viper0011.]

if people think that with drawing a few tax exemption which will barely increase taxation by 0.5% of GDP is tax reform(that too under IMF pressure) than GOD help us!

unlikly PPPP, ANP cant get into power, the power dynamics have changed for ever after death of benazir.
PML N will have clear votes in punjab and hazra belt giving it nearly 40-45% seats(out of 55% they represent), followed by Baluchistan, it seems impossible that any other party can come into power.

Another looking for "magic" statement? Rome wasn't built in one day. Pakistan wasn't sent near bankruptcy in one year either. The people in the government are trying to fix 70 years of mess. I don't think you have that in your mind when you write statements.
At a country level, starting to save .5% of your GDP (over 180 billion), is a LOT of money and it can pay for many dams / hydro electric projects, many schools, universities, many hospitals, etc, which would then help millions of people. So I am ALL for it. This is 180 BILLION that a poor country like Pakistan didn't have until this year and its a LOT of money!!

You should appreciate what's being done here too and it'll ONLY expand. The IMF pressure isn't that much as the government has very good business reputation and credibility among foreign governments and businessmen, with a track record of finishing projects on time, and without too much corruption (as audited by the transparency international). So its not IMF asking for it, any sane government, which wants to grow the country it represents, has to go through reform of the tax code, to increase taxes. This is a good starting point and it'll only expand.

On the second paragraph, I don't care about who comes into power in Pakistan. The people get to vote for it. But I'd hope the people of Pakistan will pick someone similar to the current team who's delivering left and right, creating peace, advancing the country economically and from a stability's standpoint. Pakistan can NOT afford to have a bad leader as PM for the next 10 years so the system and the economy could be developed and strengthened. It usually takes one term to come up with policies and another one to implement those and get results. The current government has worked super fast and has actually started to provide results too, when 90% of the world's government would still be planning in their second year.

 

[WishLivePak]

Another looking for "magic" statement? Rome wasn't built in one day. Pakistan wasn't sent near bankruptcy in one year either. The people in the government are trying to fix 70 years of mess. I don't think you have that in your mind when you write statements.
At a country level, starting to save .5% of your GDP (over 180 billion), is a LOT of money and it can pay for many dams / hydro electric projects, many schools, universities, many hospitals, etc, which would then help millions of people. So I am ALL for it. This is 180 BILLION that a poor country like Pakistan didn't have until this year and its a LOT of money!!

You should appreciate what's being done here too and it'll ONLY expand. The IMF pressure isn't that much as the government has very good business reputation and credibility among foreign governments and businessmen, with a track record of finishing projects on time, and without too much corruption (as audited by the transparency international). So its not IMF asking for it, any sane government, which wants to grow the country it represents, has to go through reform of the tax code, to increase taxes. This is a good starting point and it'll only expand.

On the second paragraph, I don't care about who comes into power in Pakistan. The people get to vote for it. But I'd hope the people of Pakistan will pick someone similar to the current team who's delivering left and right, creating peace, advancing the country economically and from a stability's standpoint. Pakistan can NOT afford to have a bad leader as PM for the next 10 years so the system and the economy could be developed and strengthened. It usually takes one term to come up with policies and another one to implement those and get results. The current government has worked super fast and has actually started to provide results too, when 90% of the world's government would still be planning in their second year.

not 70 years.

The mess really started during Zia and its effects started showing up after his death. Though we messed up our economy and tourism by constantly fighting India (48/65/71) and coupes/political instability, our economic growth was very good and we weren't a backward nation then. So the mess is past 30 years.

 

[Viper0011.]

The mess really started during Zia and its effects started showing up after his death. Though we messed up our economy and tourism by constantly fighting India (48/65/71) and coupes/political instability, our economic growth was very good and we weren't a backward nation then. So the mess is past 30 years.

I am sorry, in the 60's, Pakistani economists gave Korea and KSA development plans. Look where they are today. In fact, the ONLY non Arab citizen that Saudia had was the Pakistani economist who was given an honorary KSA citizenship because of his economic growth plan!!!
So this was going on since the 60's, a guy trained to fight like a boxer or a warrior, know how to do that the best. He doesn't know, business, economy and how to establish relationships to grow a country. He'll take at business will be "war like" because of his training. So the generals have only put your country through multiple ditches tarting the 60's, its not something that started like 4-5 decades years ago.

 

[Faiez]

I am sorry, in the 60's, Pakistani economists gave Korea and KSA development plans. Look where they are today. In fact, the ONLY non Arab citizen that Saudia had was the Pakistani economist who was given an honorary KSA citizenship because of his economic growth plan!!!
So this was going on since the 60's, a guy trained to fight like a boxer or a warrior, know how to do that the best. He doesn't know, business, economy and how to establish relationships to grow a country. He'll take at business will be "war like" because of his training. So the generals have only put your country through multiple ditches tarting the 60's, its not something that started like 4-5 decades years ago.

It was zulfiqar ali bhutto's fault...his nationalization ruined everything...then zia ul haq's islamization created long term problems, but to be fair, afghan war needed to be won too...