ISLAMABAD: Prime Minister Shahid Khaqan Abbasi on Tuesday granted the status of federal minister to his aide on revenue, Haroon Akhtar Khan, putting him back in the driving seat to implement the tax agenda ahead of next general elections.
The government also notified Arif Ahmad Khan as new federal secretary for finance. Arif, who enjoys good reputation, was serving as secretary in the Economic Affairs Division. Information Secretary Ahmad Nawaz Sukhera may succeed Arif in EAD. Arif will retire in March 2019.
With the status of the federal minister, Haroon will now enjoy status equal to that of Dr Miftah Ismail who has recently been appointed as adviser on finance, revenue and economic affairs with the status of federal minister. Although Ismail will still be officially having portfolio of revenue, it will be Haroon who will be calling the shots on tax matters after the prime minister.
“In exercise of the powers conferred by Rule 15(1)(g), Prime Minister has been pleased to grant the status of Federal Minister to Haroon Khan, Special Assistant to the PM on Revenue, with immediate effect,” according to a notification of the Cabinet Division.
PM Abbasi has declared reforming the Federal Board of Revenue (FBR) his topmost priority. The government also wants to take some corrective measures to appease the estranged business community that is not happy with withholding of genuine tax refunds.
The Tax Reforms Implementation Committee, headed by Haroon, has already presented more than one and half dozen reform measures to PM Abbasi. Those included measures to broaden tax base, facilitating Pakistanis to bring back offshore wealth by offering them amnesty and improving the tax machinery.
The authorities want to clear pending tax refunds in the next one and half months that will be the first challenge for Haroon.
Sources said that there were two options before the FBR – the first being to reduce the annual tax collection target of Rs4.013 trillion to the refund amount that the FBR would repay.
The estimated size of withheld refunds is more than Rs300 billion but the government was keen to return only sales tax refunds, ranging from Rs90 billion to Rs100 billion, according to the sources.
The second option was to repay the refunds by borrowing, but this was a controversial option as borrowings could not be treated as revenue of the government, said the sources.
A report commissioned by Federal Tax Ombudsman has blamed former finance minister Ishaq Dar for blocking genuine refunds of taxpayers to inflate revenues.
The sources said the FBR was also finalising the offshore tax amnesty scheme to lure foreign wealth of Pakistanis “who are feeling a squeeze due to global move against tax heavens”.
The government intends to offer 2% to 7% tax rates to wealthy people to whiten their hidden assets. It’s expected to attract $4 billion to $6 billion under the scheme. However, these rates appear too low.