Finance Minister warns speculators to refrain from speculations in forex market or be ready to face music for causing huge financial loss to economy for their petty gains
Lahore, November 16, 2013 (PPI-OT): Federal Finance Minister Ishaq Dar on Saturday warned the speculators to immediately refrain from speculations in the forex market or be ready to face the music for causing huge financial loss to the entire economy for their petty gains. The Federal Minister was speaking at the Lahore Chamber of Commerce and Industry.
LCCI Acting President Mina Tariq Misbah presided over the meeting which continued for over three hours. While LCCI Vice President Kashif Anwar, former Presidents Mian Muhammad Ashraf, Mian Anjum Nisar, Mian Misbahur Rehman, Iftikhar Ali Malik, Bashir A Baksh, Sheikh Muhammad Asif, Shahid Hassan Sheikh, Mohammad Ali Mian, Irfan Qaiser Sheikh, Mian Muzaffar Ali were prominent among the speakers.
Chiarman Federal Board of Revenue Tariq Bajwa and Deputy Governor State Bank of Pakistan were also present in the meeting. A few hands have taken the whole economy of the country hostage but we will not allow them to play at the cost of the country, said the Minister firmly.
The Minister assured the businessmen that there would be no witch hunting by the FBR to broaden the tax net. He said 165A is meant for tax evaders only. Name a single tax registered person who has been given notice under 165A? he asked.
He said increasing the tax to GDP ratio to 15 percent of the GDP is the first goal of the government which can be achieved only by registering new taxpayers. He said that the government is hopeful of fully reviving growth and economy in next five years. .
He said even adverse conditions the economy showed robust growth in the first quarter of this fiscal. He said foreign direct investment increased by 83 percent, portfolio investment jumped by 101 percent and the large scale manufacturing grew by 8.5 percent .in the first quarter of this fiscal. The negative trends in growth have been stopped and now we are moving on, he added.
Ishaq Dar said the rating agencies have acknowledged Pakistan’s performance and have upgraded its rating. He said donors have offered lucrative loans to appreciate the efforts of the new government The Federal Minister spoke at length on all issues being faced by the economy and the measures being taken to overcome these challenges. He said that a three-year well tailored economic revival plan had already put into the motion that would yield positive results.
The Minister said that economy, energy and extremism were the three serious challenges and the government was utilizing all its energies to resolve them. He said that newly imposed taxes were a result of caretaker government’s commitment with the IMF. He, however, added that the government is focused on narrowing down the foreign account and budget deficit.
On the issue of shortage of energy, the Minister said that the government was striving to ensure supply of cheaper energy to masses and for this purpose, it has launched medium and short term plans.
He said that work on Neelum-Jehlum, Diamir-Basha and Dasu dams were well on way and their completion would help end power shortage in next three years. He said that the government was also working on Civil Nuclear Technology and wind energy projects. He said that the government was determined to add 8500 MW of electricity into the national grid by year 2016.
The Finance Minister announced to form two committees comprising LCCI former President Mian Muhammad Ashraf, Sheikh Muhmmad Asif, Mian Anjum Nisar, Iftikhar Ali Malik and FBR Chairman Tariq Bajwa to look into the issues of steel industry, under invoicing, smuggling and Sales Tax Refunds.
He said that whatever decisions were taken by the committee would immediately be implemented in letter and spirit. About the transporters strike, the Minister said that he was going to Karachi and hopefully in a day or two the goods transporters would be back to business since their issues were pertaining to the government of Sindh.
About the Public sector enterprises, the government said that a mechanism had been devised to revamp these entities on modern lines through partial privatization but in this process the respective employees would be given full protection.
Speaking on the occasion, the LCCI Acting President Mian Tariq Misbah said that the business community fully understands the worst economic conditions inherited by your government. When PML(N) government took over the charge, there were severe challenges faced by economy including power outages, low economic growth, circular debt, falling investment, huge fiscal deficits, inflation, unprecedented floods, terrorism and worst law and order situation.
These factors resulted in flight of capital from Pakistan that shaved off annual GDP growth by 2% and halted the way of further industrialization in the country. Our GDP growth has stuck at a level, which is half of the level of Pakistan’s long term trend potential of about 6.5% per annum.
He said that the LCCI highly appreciates Government for taking corrective measures to address the prevailing issues including law and order situation in Karachi, circular debt, initiating plans to restructure public sector enterprises and reduction in duration of load shedding. We also congratulate your government for attaining GSP plus status from EU commission.
This status would enable Pakistan’s textile exports to get doubled in upcoming four years and create one million new employment opportunities. Considering the deficiency in the supply of very indispensable electricity and gas and on top of that very harsh taxation measures taken by the government, the anticipated advantages of having won the GSP plus status seems very unrealistic to achieve.
He said that Pakistan has lowest tax to GDP ratio in the region and we also support the government initiatives to broaden the tax net instead of squeezing the people who are already in the tax net. For that purpose the tax machinery has to find ways to add more assessees in the tax net.
He said that the industrial sector contains 20.9% of GDP contributing two third in the tax revenue whereas agriculture sector accounts for 21.4% of the GDP but its share in the state revenue is less than 1% and service sector with a share of 57% is contributing much below its potential. We are of the opinion that every sector of economy should contribute in the national exchequer proportionate to their respective incomes.
The LCCI Senior Vice President said that currently smuggling is at its peak. Markets are flooded with smuggled items covering all sectors and products causing loss of billion of rupees to the national exchequer.
We are of the view that by using latest techniques like tracking of containers at highways entry and exist points, instead of appointing monitoring staff at factories and manufacturing concerns, will help collect billions of rupees as custom duty and other taxes.
He said that it is need of the hour to reduce customs duty on smuggling prone items to encourage legal imports. It will not only increase government revenue due to enhanced import but also address the issue of competitiveness on the part of commercial importers.
The smuggling prone items may be identified in consultation with trade and industry. The case of massive smuggling of plastic raw-material (Chapter 39) from Iran can be taken as an example. The rate of duty on plastics is proposed to be reduced to 5%. Rate of withholding income tax may also be reduced.
Mian Tariq Misbah said that imports against TT are increasing due to massive misuse of the facility. It needs to be discouraged and appropriate legal framework for this purpose may be introduced. Furthermore, import of luxury items e.g. vehicles should also be discouraged instead of allowing amnesty schemes for such smuggled items.
He said that mis-declaration of value at the ports is causing huge losses to the national exchequer. The example of imports from China clearly shows that almost 2 billion dollars worth of goods are declared at less value than the country of origin price resulting in loss of almost Rs. 70 billion in the form of custom duty and taxes if calculated @ 35%.
He said that these were some of the important issues, I shared with you in brief in welcoming address. Once the house will be open for discussion, my senior members would like to elaborate some crucial issues concerning with their sectors relating to taxations.
For more information, contact:
Lahore Chamber of Commerce and Industry (LCCI)
Lahore -54000, Pakistan
Tel: +9242 111 222 499
Fax: +92 42 636 8854
Category: Chambers of Commerce