ISLAMABAD: Parliamentarians called on Thursday for steps to put an end to over Rs500-600 billion worth of annual corruption in the Federal Board of Revenue to meet the country’s economic needs, instead of putting the people under regressive Reformed General Sales Tax and its inflationary impact.
Taking part in proceedings of the National Assembly’s Standing Committee on Finance and Revenue, members belonging to PML-N, Awami National Party, PML-Q and MQM said former finance minister Shaukat Tarin had stated before a parliamentary committee that Rs500-600 billion was being wasted each year because of leakages in the tax machinery.
Unlike Wednesday’s heated discussion on RGST, the parliamentarians highlighted sector-specific problems arising out of the new tax laws and PML-N’s Shahid Khaqan Abbasi pointed out FBR’s ‘indifference’ towards cash flow problems of the textile industry and Khawaja Asif called for giving consideration to reward and punishment in the new tax laws. PML-Q’s Kashmala Tariq said the nation should not be expected to pay the price for inadequacies of the tax machinery.
They said it was time for the FBR to put its house in order to stop such a massive leakage in its system, instead of killing the goose that lays the golden egg like the textile industry which earned $16 billion in foreign exchange through exports and employed over 15 million people.
Their main concern was that the RGST on the textile chain would hold up more than Rs518 billion of the industry’s money in the refund claim and verification system, although the total realisable tax would be Rs25 to Rs40 billion per annum. Such a huge amount would create cash flow problems for the industry which was borrowing from banks at 18 per cent interest.
While FBR Chairman Sohail Ahmed did not agree with remarks about corruption, he said he would not entirely rule out leakages. He said the corruption amount attributed by members of the committee to the former finance minister was out of context because a study conducted by Department for International Development (DFID) of UK had given similar number as potential for generating more revenues by controlling tax evasion and corruption.
The chairperson of the standing committee, Fauzia Wahab, and members agreed to invite Mr Shaukat Tarin to present his viewpoint on the way tax authorities were explaining his assertion.
MQM’s Rashid Godil said the agriculture sector should be brought under an effective tax system so that it could contribute its share to the revenue commensurate with its size in the GDP.
Mr Sohail Ahmed contested All Pakistan Textile Mills Association’s claim that the proposed RGST on six stages of textile industry, from raw material to export, would block the refund of Rs500 billion and create liquidity problems for the sector. He said the figure was exaggerated and the actual amount was not more than Rs127 billion because Rs219 billion would stand adjusted within the textile chain.
A committee comprising parliamentarians, FBR members and APTMA was formed to work out the actual refund figures and suggest possible solution.
