Govt hints at partially restoring curbs on non-filers of tax returns

Minister says govt agrees with PML-N’s policy, but wants to further refine the law

Shahbaz Rana September 25, 2018
The government wants to make life difficult for non-filers of tax returns and is even considering imposing a ban on securing new commercial and industrial electricity connections by them. PHOTO: FILE

ISLAMABAD: The government on Monday hinted at partially restoring the ban on purchase of new cars and property by non-filers of tax returns as it struggled hard to convince opposition that its mini-budget would not throw Pakistan back into an era of low growth and high inflation.

On the first day of scrutiny of the mini-budget, the Senate Standing Committee on Finance deferred a vote on the government’s budget proposal that lifted the ban from non-filers of tax returns after Revenue Minister Hammad Azhar assured the body that the government would find a middle ground.

Major policy shift: Govt allows tax dodgers purchase of cars and real estate

The committee has 14 days to finalise its recommendations on the budget, which will be sent to the National Assembly for consideration.

The government has been facing criticism since it allowed purchase of new vehicles and property by non-filers of tax returns. Finance Minister Asad Umar on Tuesday last week unveiled the mini-budget, which surprised many as there were glaring contradictions in the government’s economic policies.

On the one hand, it has claimed that it will boost economic growth to create jobs but on the other hand it has introduced fiscal stabilisation measures that will stifle growth and increase unemployment.

“In principle, we agree with the PML-N’s policy of imposing the ban on non-filers, but we want to further refine the law,” said Azhar during the standing committee meeting.

He stressed that the government wanted to make life difficult for the non-filers and was even considering imposing a ban on securing new commercial and industrial electricity connections by them.

However, he said the ban in the current shape was against the constitution and income tax law. “The government is trying to find a workable solution where only those people are barred from purchasing cars and property that are required to file income tax returns but they are not filing it,” said Azhar.

Under the law, he said, exporters were not even bound to file income tax returns.

Senator Haroon Akhtar Khan said despite the election year, the last PML-N government swallowed the bitter pill and imposed the ban on non-filers. Allowing non-filers to purchase cars and property was not in the national interest, he said.

Standing Committee Chairman Farooq Naek, an eminent lawyer, said the government could impose reasonable restrictions in the larger public interest. Non-filers, who buy small cars, small pieces of land of a certain value, widows and overseas Pakistanis may be exempted from the ban, he suggested.

“PTI’s economic policies, if any, will lead to stagflation,” said Haroon Akhtar Khan, who was also a former revenue minister.

The mini-budget was not providing remedy to the economic problems that the government cited as reasons for revising the budget, he said, adding the mini-budget did not offer solution to the low export base.

Increase in gas, electricity and petroleum prices, hike in interest rate and cut in development spending would throw the country back into an era of low economic growth and high inflation, he warned.

“The government has introduced the mini-budget to save Pakistan from inevitable bankruptcy,” claimed Azhar. The previous government failed to undertake structural reforms after bringing stability, that was why “we are near bankruptcy”, he added. The minister called the previous budget irresponsible as well as an election-year budget and said economic growth during PML-N’s tenure was supported by high budget deficits.

“Stabilisation, recovery and sustained economic growth is the plan of the PTI government,” emphasised Azhar. The main focus of the budget was on stabilising the economy as the country was in the midst of a severe economic crisis, he said while pointing out that Pakistan had the largest-ever current account deficit of $18 billion and fiscal deficit of Rs2.3 trillion in the last fiscal year.

Tax efforts were aimed at curtailing imports and recouping the tax losses caused by the last government’s decision to massively reduce the income tax rates, he explained, adding regulatory duties had been imposed both to increase revenue collection and curtail imports.

While Azhar claimed that the country was near bankruptcy, in an interview to The Arab News, Finance Minister Asad Umar said “Pakistan is not in an emergency situation that requires it to rush to the IMF.”

PTI govt unveil Rs5.3tr revised ‘status quo’ budget

Azhar said the last government used wrong assumptions to prepare the budget and criticised the assumption of Rs285 billion in provincial cash surplus. However, in the revised budget, Umar left the estimate of Rs285-billion surplus unchanged.

The standing committee backed the government’s budget proposal to offer tax amnesty to about 900,000 people who had been automatically picked for audit after they failed to file income tax returns.

It put off a vote on the government’s plan to increase tax rates for the salaried and business income of the individuals.

Published in The Express Tribune, September 25th, 2018.

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Muhammad Yousuf | 3 years ago | Reply I was a tax filer up to 2006 after retirement in 1998 having income from saving certificates which were tax exempt. How can I become a filer?
Ali | 3 years ago | Reply I wouldn't want to be a filer after looking at the tax return document. Why not simplify it to only include taxable income and allowable expenses.
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