The federal government would provide relief to the salaried class at the first opportunity it gets, Finance Minister Muhammad Aurangzeb has said.
“I understand the pain and empathise with what people are saying. As far as I am concerned, the first opportunity that we get we will hopefully take it to relief,” he said while appearing on News Insight with Amir Zia aired on Aaj News on Monday.
“It will happen over a period of time. We will decrease it over a while gradually at the very first opportunity we get.”
Aurangzeb, the former Habib Bank Limited chief executive officer, admitted that there were concerns by the salaried and revealed that he was one of the highest taxpayers when he belonged to the same class.
Several economic experts criticised the federal government for imposing further taxes on the salaried class in the budget that was one of the largest income tax contributors in the country.
They added that the budget was not different from the past and lamented that the government did not tax other sectors.
Aurangzeb, who appeared on the show via video link from Islamabad, claimed that the government was working hard to bring retailers into the tax net. He added that the new punitive actions would lead non-filers to think “three, four or five times about why they are not part of the net.”
The government hopes to achieve a staff-level agreement with the International Monetary Fund in July, he said and added that the size of the programme was under consideration.
According to media reports, Pakistan was seeking $6 to $8 billion from the Fund under the Extended Fund Facility for a three-year programme.
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The minister admitted that Pakistan only has enough dollars to last a few months leading to the country running back to the IMF again and again. He said that an extended program with the IMF would be a stamp of approval for the economy’s stability.
According to Aurangzeb, there was a positive progress on both sides related to the loan programme. He reiterated that the country needed reforms in the energy sector and the state owned enterprises to stop economic losses.
If the country did not take necessary measures then it would continue to seeking the IMF programme, he added.
But he admitted that structural reforms were a difficult task. “These are very unpopular decisions,” he said and added that the government removed political appointees and brought in private sector people to improve governance.
“I see it as we have to be very clear about the road to market. There can be a discussion on export-led growth, foreign direct investment, access to international capital markets,” he said.
The finance minister said that the tax expansion was under discussion and traders and builders were the two sectors that have to be brought into the tax net. More than 40,000 people have registered with the Federal Board of Revenue, he said.
“On the industry side, for the first time we have asked exporters to end the presumptive regime and this is not a tax on export but on income. If there is a loss then there is no tax. Just to make sure, we have to discuss that it was a real concern and right complaint from our exporting community that you take our refunds,” he said, “we are returning the determining sale refunds and we will clear all these in two days till the end of June because it takes two to tango. We also have to deliver.”
He added that he Public Sector Development Programme was revised and 81% of the funds were allocated for the ongoing projects while the remaining funds were allocated for the new projects.
Aurangzeb revealed that Rs1 trillion was the per annum cost of pensions in terms of unfunded liability. He added that after every two months, the government would update the people about its austerity measures under which some ministries would be closed, merged or devolved.
He shunned the impression that it was a mini-budget and that agriculture and information technology were the two sectors that had to be boosted.
The minister expressed hope that the currency would be stable and have macroeconomic stability after the EFF
He was of the view that the real interest has to be kept in a “positive regime,” as enough cushion was available to bring it further down.
When asked, he said that it was a huge privilege for him to serve the country as a finance minister. “It’s easy to give advice from the outside, so I said let’s now go and try to help execute what has been out there for the longest time.”
