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Dr. Abdul Hafeez Shaikh, Minister for Finance, Revenue and Economic Affairs, has stated that a fair, equitable and corruption-free tax system is a primary objective of the government.
The minister made this statement while chairing a meeting of the Tax Reform Coordination Group (RCG) held here and attended by the Members of RCG, Deputy Chairman Planning Commission, Governor State Bank of Pakistan, Secretary Finance, Chairman FBR, FBR officers and Ministry of Finance officers.
The RCG was formed by the Finance Minister in July 2010 to assist on matters related to adoption of modern tax administration, formulation of tax policies and facilitation of taxpayers. The RCG includes former FBR chairmen and members as well as representatives of the trade and industry. The RCG was divided into three sub-groups namely Sales Tax and Federal Excise, Income tax and Customs. The three Sub-groups presented their reports on proposed reforms in their respective areas.
The Sales Tax and Federal Excise Sub-group (Mr. Abdullah Yusuf, Mr. Ali Jameel and Mr. Arshad Zubari) presented their recommendations on the Reformed GST (RGST). The Subgroup also questioned FBR’s preparedness in implementing RGST. Emphasis was placed on reducing the pendency of refund claims, creating a data warehouse of third party data to broaden tax base, reducing the tax gap as well as implementing a seamless cycle of the entire transaction from the time of submission of returns to the automatic transfer of refund to the tax payers in their bank account.
The Customs Sub-group (Mr. Ahmed Waqar, Mr. Muhammad Sulaiman, Mr. Abid Hassan and Mr. Shahid Abdullah) highlighted that Pakistan Customs needs a multi-faceted approach for its reforms program. It requires skilled manpower, robust automation system and sustained commitment from political leadership and senior management. The report stressed upon administrative issues of the Post Clearance Audit, internal audit and certain infrastructure measures. The Sub-group also presented recommendations on improving unauthorized trade, countering smuggling, Customs integrity and human capacity.
The recommendations of the Income Tax Sub-group (Mr. Vakil Ahmad Khan, Chaudhry Muhammad Arshad and Syed Mohammad Shabbar Zaidi) included establishment of a Fiscal Policy Board to be headed by the Finance Minister. The Board may consist of Chairman FBR, renowned economists, and stakeholders like FPCCI, APTAMA, ICAP. The focus of this Fiscal Policy Board will be on industrial growth, enhancement in foreign exchange earning and export. The formation of this Board will help in separating the issues of policy formation and execution of the policy. The report recommended a review of the functional organizational setup of FBR.
The Finance Minister appreciated the efforts of the three Sub-groups and assured them of giving their recommendations his highest consideration. He instructed FBR to formalize the recommendations for their early approval by the Government.