Except translation, this story has not been edited by achinews staff and is published from a syndicated feed.
- FBR acknowledges difficulty in meeting tax target of Rs12.97tr.
- Currently, 2.5m 6m registered taxpayers do not contribute tax.
- FBR unveils plan to integrate 2m additional traders into tax net.
ISLAMABAD: The Federal Board of Revenue (FBR) dismissed the small budget, asserting confidence in meeting its revenue targets despite the challenges ahead, The News reported Thursday.
Earlier, the tax collection authority was set to present a small budget aimed at generating around Rs650 billion in revenue mainly by cracking down on tax evaders and increasing general sales tax (GST). on property, tractors and other items.
During a meeting of the Senate Standing Committee on Finance and Revenue, chaired by Senator Saleem Mandviwalla, FBR Policy Member Hamid Ateeq Sarwar acknowledged the difficulty of reaching the tax target of Rs12.97 trillion for the financial year.
Sarwar identified significant obstacles, including challenges in carrying out audits and recruiting new staff. Currently, 2.5 million of the 6 million registered taxpayers do not contribute any tax. In addition, he said the government will not extend the deadline for filing tax returns.
In response to these challenges, Sarwar announced plans to hire 4,000 auditors and integrate 2 million additional traders in the tax net. He emphasized that “no new tax measures are being considered.” The FBR is also focusing on bringing wholesale markets into the tax system, despite ongoing difficulties in this area.
Discussions needed to assess Islamic banking
Earlier, the parliament received information from the State Bank of Pakistan (SBP) Governor Jameel Ahmad on the Islamic banking system, explaining that it is regulated by the Shariah Advisory Committee and the Shariah Compliance Department under the Shariah Governance Framework (SGF).
After examining the mechanisms of Islamic banking, the committee members concluded that further discussions are needed to assess its regulation in accordance with Islamic principles. The chairman asked for a comparative report on SBP regulations for Islamic and conventional banking. He expressed concern over the omission of HIBA from the musharakah contract and suggested that banks that generate higher returns through Islamic banking could promote it more.
The committee urged the SBP to address this issue. When the governor described it as a specific issue, Senator Anusha Rehman objected, stating that it was not only specific but rather a fundamental problem.
He asked whether losses in Islamic banking are passed on to clients. An SBP official responded that if an Islamic bank goes into loss, it typically reduces its profits to protect consumers, citing competitive pressures.
Senator Mandviwalla highlighted a common complaint that Islamic banks offer 4% less profit compared to conventional banks. The SBP confirmed this difference, stating that the return on deposits in Islamic banks in July 2024 was 14.1%, while conventional banks offered 18.8%.
Senator Mohsin Aziz said Islamic banks’ balance sheets appear “greener” than those of conventional banks, suggesting they offer lower returns. In response, the governor noted that Islamic banks generally have fewer investment avenues.
The committee noted that if the Islamic banking system was implemented in its true spirit, it could mitigate inflation and encourage widespread adoption among Pakistanis.
Mandviwalla called for stricter regulations for Islamic banks, similar to those governing conventional banks, to ensure fairness in the banking sector. He stressed, “The government has made life easy for banks; they don’t even need to pay attention,” while emphasizing the need for banks to diversify their loan portfolios.
Lack of loan allocation for industrial enterprises in KP, Balochistan
Senator Mohsin Aziz raised concerns about the lack of loan allocation for industrial enterprises in Balochistan and Khyber Pakhtunkhwa, stating, “All banks are owned by rich individuals, and they do not invest in these states.” He pointed out that the loan allocations in Khyber Pakhtunkhwa were only 0.98%, with Balochistan even lower at 0.35%.
The SBP governor acknowledged the issue but noted that heavy borrowing by the government was limiting banks’ willingness to pursue other lending opportunities.
The committee also discussed the Exim Bank, which was set up in January with Rs230 billion allocated under the Export Finance Scheme, which still does not have a CEO. Mandviwalla questioned the sacking of the former CEO, who had served for four years and received a substantial salary despite being deemed “not clear” in an intelligence report.
Anusha Rehman demanded transparency regarding the criteria for appointments and the rationale behind the dismissal of the former CEO. He emphasized the importance of transparency, stating, “Tell us the reasons behind this situation,” and offered to call the former CEO to give direct explanations to the committee.
The committee unanimously approved the government’s bill titled “The Banking Companies (Amendment) Bill, 2024,” with proposed amendments. In addition, a private member’s bill, “The State Bank of Pakistan (Amendment) Bill, 2024,” introduced by Senator Mohsin Aziz, was passed by a majority, with Senator Anusha Rehman abstaining from the vote. Concerns have been raised about junk lending practices in smaller states, particularly Balochistan and KP, which has hindered industrialization.
The additional finance secretary addressed amendments to sections 14B and 14C of the Members of Parliament (Salaries and Allowances) Act, 1974, through the Finance Act, 2024, emphasizing the prerogative of parliament in adopting these changes. The committee directed the Ministry of Finance to respond within three days.
Increasing demand for autonomy
The chairman of the committee addressed the growing demand for autonomy regarding the salaries and allowances of members of parliament. The committee has tried to follow the lead of the National Assembly in giving discretion over these financial matters.
“When the National Assembly’s amendments have been approved, discretion should also be given to the Senedd,” said Mandviwalla. The Finance Secretary, Imdadullah Bosal, confirmed that the Ministry of Finance would review the proposal and update the Senate Secretariat.
After the meeting, the SBP governor told the media that inflation is expected to remain around 11.5% while GDP growth is likely to range between 2.5% and 3.5%. Speaking to the media on Wednesday, Ahmad noted that Pakistan’s current account deficit is projected to be around 1% of GDP.
Originally published in The News
(Except translation, this story has not been edited by achinews staff and is published from a syndicated feed.)
source link https://www.geo.tv/latest/566014-fbr-rules-out-mini-budget
