In a press conference today, after the announcement of the annual budget, Finance Adviser Abdul Hafeez Shaikh confidently defended the government’s viewpoint to increase the average tax rate. He supported his views with the argument that Pakistan is one of the lowest countries which have an average tax rate of 11% to 12%, which is definitely not a wise number.
He said that “If we have to offend some people for this (increasing tax rate), then we are ready to do it,”
While commenting on the giant tax target set at Rs.5,500 billion, he said that “This is not an easy target for us. If there are people who think that this target is not achievable, they won’t be entirely wrong given FBR’s performance in the past. But this is a new regime and we will try to achieve the target. The stakes for the country are so high that it cannot be business as usual. We will have to reduce our expenditures and we have to give this message to the Pakistani public that we will be at the forefront of reducing our expenses. If we are asking people to sacrifice, we will have to convince them that we are ready to make sacrifices as well”
Earlier in the budget, the government has already announced a reduction of 10% in salaries of the members of the cabinet which justifies the claims of austerity. Furthermore, the salaries of civil servants were also increased but slightly.
Sheikh emphasized that rich should be sincere with the country and by paying due taxes. Chairman FBR, Shabbar Zaidi who was also presented, commented that the government has revised the tax system to identify the less tax paying sectors. He included that high-pay individuals will likewise be incorporated into the expense base so as to expel the separation between the rich and poor.
