ISLAMABAD - The government will not withdraw Statutory Regulatory Orders (SROs) granting sales tax exemption on the import of crude oil in the upcoming budget for next financial year (2014-2015) as it could bring another severe inflationary wave in the country.
“The government cannot withdraw SROs granting sales tax exemption on the import of crude oil in next budget, as this will lead to fuel the inflation that will create unrest among the general masses”, said an official of the Federal Board of Revenue. The FBR has granted sales tax zero-rating on the import of crude oil having revenue impact of Rs 94 billion per annum, he added.
The prices of petroleum products would massively increase if government withdraws tax exemptions on crude oil that would accelerate the inflation rate.
He said that Finance Minister Senator Ishaq Dar on Monday chaired a meeting to review the concessionary regime (SROs) at FBR. However, the meeting has not decided that on how many items tax exemptions would be withdrawn in the budget. He added that finance minister called another meeting after two weeks to finalise those items on which exemptions will be withdrawn in the budget.
It is worth mentioning here that Pakistan had assured the IMF to withdraw the tax exemptions worth of around Rs 480 billion in next three years. Under the plan given to the IMF, the government would withdraw tax exemptions in three phases, starting from July 1, 2014, and its last phase will be implemented by the fiscal year 2016-17.
Meanwhile, according to a press statement issued here, the second meeting of the committee constituted by the Prime Minister Nawaz Sharif to review the concessionary regime (SROs) was held at the FBR. Finance Minister Senator Mohammad Ishaq Dar chaired the meeting.
Chairman FBR informed the Committee that the sub-committee held its various meetings with the stakeholders to firm up recommendations to be considered by the Committee. He gave a detailed presentation on the deliberations of the sub-committee in the light of principles formulated by the Committee.
On the occasion, Finance Minister Senator Mohammad Ishaq Dar said that in order to promote local industry we need to focus on its development and promotion. He said that the role of the Engineering Development Board (EDB) is very important. It has to strengthen the engineering sector and integrate it with the world market to make it driving force for economic growth. He directed EDB officials to work with the FBR team for firming up final recommendations in regard to machinery and related items.
The finance minister assured the representatives of the Chambers of Commerce and Industry that the interests of the domestic industry will be protected for the purposes of employment generation and to keep it competitive. The minister directed Chairman FBR to separately meet with the representatives of the Chambers of Commerce and Industry for incorporating their recommendations.
Dar further said that the government will provide protection where required and will not impose any burden where it is not sustainable or impacts the common man. The finance minister said that the Prime Minister’s decision to constitute this Committee and include in it, representatives of relevant ministries as well as stakeholders including business persons is aimed at taking all on board so that the decisions pertaining to removal of distortions and disparities in the SROs are made with collective wisdom. In this connection, the Finance Minister said, the Federal Board of Revenue (FBR) has been working hard to rationalize and streamline SROs and he has himself held several meetings.
The meeting was attended by Ahsan Iqbal, Federal Minister for Planning and Development, Khurram Dastagir, Federal Minister for Commerce, Abbas Khan Afridi, Federal Minister for Textile Industry, Secretary Finance Dr Waqar Masood, representatives of Federation of Pakistan Chambers of Commerce, Karachi Chamber of Commerce, Lahore Chamber of Commerce, KPK Chamber of Commerce, Secretary Board of Investment and senior officials of the federal government.