Advisor to the Prime Minister on Finance, Dr. Abdula hafeez Sheikh hinted in an interview with a private TV Channel that no new taxes shall be levied in the next fiscal year federal budget, in addition to bringing duties to zero level on many more items. The business community has been clamoring over the past twelve years for taxes and duties reforms. It were the several regressive indirect taxes, high import and regulatory duties on capital goods, intermediate goods, industrial raw material and high tariffs of energy inputs that made the economic environment extremely unfavorable and placed the country on 147th position in the World Bank Ease of Doing Business Index, 2018.
Government has already reduced policy rate to 8 percent and zero duty regime on the import of machinery and industrial raw material will certainly lubricate the wheel of the economy for taking spurt in investment and output. The economy had been hit by recessionary cycle since 2008 and slipped into stagflation from 2013. The coronavirus pandemic turned out a proverbial “the last straw on camel’s,” The size of the economy has shrunk from $350 billion to $264 billion. Advisor on Finance has asked Chairman FBR to improve the country’s tax structure; gather and reconcile data with selected markets and chambers of commerce and industry to enhance tax collection. While entering into IMF programme of $6 billion, tax revenue collection target of Rs.5.1 trillion had been agreed but now revenue of Rs.3.9 trillion can hardly be collected from tax and non-tax sources. The liberal monetary incentives and reduction in duties and rates of certain regressive taxes will accelerate the pace of revival of economy.