FM urges self-reliance to achieve economic stability

04 Sep '09

5 min read

Later talking to media men, Shaukat Tarin highlighted the importance of value addition for taxation purposes on the retail stage as widening of taxation base. At the retail stage it is basically the issue of understanding and tapping the whole supply chain of goods and services. However, enforcement of any such tax on such a stage cannot be adequately done if the tax collecting machinery is not properly aware of the facts and figures regarding the different social segments, documentation of small to medium businesses, their supply chains and financial capacity of the retailers themselves. All this needs to be thoroughly researched, properly documented and comprehensively digitized by the tax machinery.

To another question, he underscored the VAT service delivery and its impact on the lives of our taxpaying community which is the backbone of our economy. FBR should keep in mind that VAT in today's world is considered as a powerful tool in harnessing funds in domestic markets. These funds can then be used by the developing countries like Pakistan to meet the challenges like increasing mass education, poverty eradication and provision of socio-physical infrastructure.

The minister cited the example of Sri Lanka which at a 15 per cent VAT had been able to increase its tax-to-GDP ratio by seven per cent and if Pakistan could increase its tax-to-GDP ratio by four per cent through the implementation of VAT, it would be able to raise an additional Rs 600 billion, taking us close to bridging the Rs 722 billion fiscal deficit.

Earlier FBR Chairman Mr Sohail Ahmad in his address to the inaugural technical session of the conference highlighted the steps taken by FBR for generating more revenue through massive reforms, re-structuring and business process re-engineering which he said could also serve in the implementation of VAT from July 2010.

He said the government believed the impact of taxes generated through VAT would be significant in covering all those sectors which earlier enjoyed exemptions in one way or the other. He welcomed the participants of the conference which he hoped would be able to come up with a way forward for the implementation of value added tax in an incentive-based, transparent and harassment-free environment.

Federal Board of Revenue

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