The caretaker government has developed an action plan to restructure the Federal Board of Revenue (FBR) by separating Customs from the revenue collection function.
In her online address at the concluding session of the two-day conference titled “The Future Summit – The Big Picture”, organised by the Nutshell Group, Caretaker Federal Minister for Finance and Revenue Dr Shamshad Akhtar on Thursday said that Customs would be tracking smuggling while revenue collection would be done by the FBR. “This is part of the FBR restructuring and there will be a notification to this effect sometime next week.”
Besides, the restructuring will split the FBR into two separate divisions – revenue collection and policymaking – in an effort to increase tax receipts, raise the number of taxpayers and document the informal economy
The interim government aimed to increase revenue collection through the segregation and reduce the nation’s reliance on borrowing. It would create some fiscal space with banks to finance the private sector and ramp up economic activities, she said.
Akhtar announced that the government was going to deploy technology to increase the number of taxpayers and minimise the tax policy and compliance gap.
“It (technology) will help us increase tax collection and will reduce the share of shadow economy because we will be hunting all non-filers more effectively and also the taxpayers who have been under-reporting their incomes.” The government has devised a strategy to work closely with the National Database and Registration Authority (NADRA), which will also upgrade its data systems.
A technical committee has been established, which will be chaired by the NADRA and FBR chairpersons. “I will be working with them inside or outside of the technical committee, given that I have to look at other areas of tax administrative reforms too,” said Akhtar.
Read:FBR forms body to facilitate taxpayers
She pointed out that the big question was, “will Pakistan rise to the challenges and transform its economy?” and answered in the same breath “of course, I would like to think we will be able to rise up to the challenges.” But for this, Pakistan needs more innovation and diversity for sustainable growth. The manufacturing base, export base and agriculture are all focused on a very narrow range of products and have failed to penetrate new markets because they have not been diversified.
“Neither our agriculture, nor our exports, industry, workforce (have been diversified),” she said, adding that ambitious reforms needed to touch upon not only those four critical sectors, but should do more than that including the introduction of a technological revolution.
“Effective implementation of ambitious reforms will depend on our ability to achieve political stability, institutional and governance strengthening. We need to build stronger institutions to deal with today’s crisis.”
She stressed that the conclusion of first International Monetary Fund (IMF) review under the $3 billion loan programme demanded the deepening of structural reforms to achieve sustainable economic growth. The minister added that successful completion of the review would lead to the receipt of next loan tranche of $700 million, which would stabilise Pakistan’s foreign exchange reserves.
While the creation of Special Investment Facilitation Council (SIFC) was often criticised, its objective was to mobilise new investment in critical infrastructure and the neglected productive sectors, including agriculture, minerals and IT services, she said. Under the SIFC, a transaction pipeline to expedite investment in critical infrastructure has been developed. It includes investments of $10 billion, particularly the Saudi Aramco refinery project and the lease of corporate farms over 85,000 acres to potential foreign investors.