ISLAMABAD   -   Finance Minister Shaukat Tarin on Friday informed the Senate that PTI government has rejected the recommendation of the International Monetary Fund (IMF) to impose new taxes worth Rs 700 billion in the annual budget for fiscal year 2020-21.

Winding up the budget debate in the Upper House, the Finance Minister said that international lender had recommended to impose taxes worth Rs 150 billion only on the income of taxpayers in addition to already imposed income tax amounting Rs 113 billion on them—a recommendation that was also refused by the government. He said that it was him who stood against such proposals and said that “this is basically not going to help Pakistan.”

“I said that this is not progressive, rather it is regressive, we will widen the tax base and will bring those into the tax next to those who don’t pay taxes,” he told the House. Tarin said that the government has got profiles of 15 million citizens whose expenditures including electricity and phone bill and bank accounts show that they should be taxpayers but they are not paying any penny.

But Federal Board of Revenue (FBR) would not approach them but third-party audit of their accounts would be conducted or organizations like traders, doctors or bankers would be asked to convince them to pay the tax, he said.

“Even if they are not convinced, then we have added the provision of arrest in the Finance Bill 2021 as a deterrent,” he said. 

Responding to the criticism of Opposition Senator Raza Rabbani about the powers given in the Finance Bill to FBR to arrest taxpayers and retailors before any of their tax assessment, the Minister said that the provision has a context that the people say that taxpayer doesn’t file return due to harassment of the board.

“We have taken a major decision in the budget by resuming self-assessment (by the taxpayer),” he said ,adding, that taxpayer can himself determine and make assessment of his taxes and financial statement.

After this, tax officer will not go back to him if he understands that some things are missing in it, he added, he said. Then we will create a third-party audit through a group of Chartered Accountants and through a legal structure, he added.

He said that the government will only conduct 5 to 6 per cent audit out of the total recommendations made by FBR. “We only have to create a deterrence,” he said ,adding, that the notion was wrong that already taxpayer will be coerced in the process. 

The Finance Minister said that the Section 203 of the Finance Bill about giving arrest powers to FBR is being reformed. “We are basically going to make it in a way that it should be satisfactory to everybody as this has become a big issue.”

He said that he alongwith two members from FBR would take the final decision about the arrest and a scrutiny would be held on “a selective basis and at very high level” and arrest would be made only if someone is “extreme willful” tax defaulter.

“It would be a due process and it is not just to walk in and arrest,” he said. He reminded that such provisions of arrest also exist in other parts of the world.

Before Chairman Senate Sadiq Sanjrani prorogued the House, Tarin concluded by saying that that all taxes on food items including milk and flour have been withdrawn while withdrawal of taxes on machinery is under consideration.

Earlier, PPP Senator Raza Rabbani taking part in the budget debate pointed out that Finance Bill has proposed some “sweeping powers” for FBR and Customs officers for arresting and prosecuting taxpayers and retailors. He opposed the provision of arresting anyone before assessment of his tax details and said that it would be tantamount to converting “the FBR into mini-National Accountability Bureau (FBR)”—the anti-corruption watchdog. Raza Rabbani alleged that annual budget has been prepared by “second grade IMF officers, Pakistani employees of the IMF and crony capitalists.” He said that IMF was the new East India Company in Pakistan.

He criticised the PTI government and said that budget gave no relief to the common man in the shape of prices of essential commodities, petroleum prices, and electricity and gas tariffs. He quoting different statements of Finance Minister said that these showed that budget would be decided at the conclusion of government’s negotiations with IMF negotiation and not by the Parliament.