VAT plan to go ahead: Finance Adviser

ISLAMABAD: Dr Hafeez Sheikh, the prime minister’s Adviser on Finance and Revenue, has said that the government is not considering any alternative plan in lieu of value-added tax because it was determined to introduce the levy in July.

Talking to media after a seminar here on Saturday, Dr Sheikh said that plans had been prepared to book non-filers of tax returns and there would be no compromise over tax evasion.

He said it was in the interest of the country to improve tax collection and work out methods to document the economy.
“It is in our interest to stand on our feet and stop the vicious borrowing circle. The nation will have to reduce all kinds of expenditures if resource generation cannot be increased,” Dr Sheikh said. He said that those opposing VAT on the grounds that it was based on the IMF agenda were unrealistic.

“Pakistan went to the IMF when the country was in serious financial crisis and they are offering us more than $11 billion,” he said.

Dr Sheikh said that there was a need for ‘disciplining’ the economy and VAT was one of the best ways to check tax evasion other than increasing the tax base.

DEADLOCK:

Differences over collecting VAT on services between the federal government and Sindh remained unresolved, prompting FBR chairman Sohail Ahmed to make it clear that only an integrated form of VAT was practicable.

Mr Sohail said at the seminar that VAT was the need of the hour and majority of those opposing it were either tax evaders or non-filers.

“Those who do not want to go for documentation of the economy are against VAT,” he said.

The country was left with no choice but to be hard on tax evaders for increasing tax collection, the FBR chief added.

Dr Ashfaque Hassan Khan of the NUST School of Business Administration said that budget makers should aim at stabilisation of economy instead of focussing on growth rate only.

He said that VAT would not have any inflationary impact because it would not be levied on basic food items, including vegetables and milk.

Dr Hassan, however, said it was the failure of the FBR and the government that many people, including parliamentarians, were unaware of VAT implications.

Economic Advisory Council Chairman Dr Hafeez Pasha proposed increasing income tax exemption for salaried class from Rs200,000 per annum to Rs250,000.

The EAC has proposed expansion of the Benazir Income Support Programme to over six million families.