KARACHI (March 09 2003) : Shaukat Aziz, Prime Minister's Advisor on Finance and Economic Affairs, has said that henceforth audit of businessmen by the Directorate of Revenue Receipt and Audit (DRRA) will not be undertaken, and necessary instructions have been issued in this regard by the Directorate.
Addressing members of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) at the Federation House here on Saturday he said, “This is the start of pre-budget dialogue to share some thoughts with members of the business community on the budget which is under preparation. We recognise that there is lot more to be done and irritants removed.”
He said that the Director General of DRRA has informed him about the issuance of instructions, “but in case these are not being followed I should immediately be informed,” he asked the President of FPCCI.
On the scope of audit, he said that instructions issued by the Central Board of Revenue would be given legal cover by issuance of SRO.
On the unprecedented increase in forex reserves, a happy and jubilant Shaukat Aziz said : “This is our insurance policy. We can talk with confidence with the investors now and they will also talk with a different mindset in dealing with us.”
He clarified that there was a difference between the forex reserves and the national budget.
The development projects receive budgetary allocations but forex reserves are public money.
It is different from funds allocated in the budget for different projects.
“I do not hold cheque book for forex reserves,” he said and added that the State Bank of Pakistan is inviting experts to advise how best these reserves can be utilised.
He said that the government considered the business community as a major asset and partner.
He said: “Do not go by gimmicks and do not ask for concessions.” He assured the business community that while the government's goal remains in reduction of taxes, “it is your responsibility also to pay taxes honestly”, he said, adding that “we have to move towards competition by 2005 for which we should be prepared.” General subsidy is not good, he added.
He said: “Although leakages in taxes are rampant, we will continue to simplify the tax system. We are neither rigid nor afraid of changes. What is needed is reform in tax culture.”
Shaukat said that the new budget would focus on job creation and growth creation.
He said that the government in the past had been accommodating businessmen to the extent of “do-ables” as other suggestions which were not incorporated as budgetary measures in the past were “non-do-ables”.
He said he is cognizant of the fact that there exist a lot more irritans coming in the way of promoting business in the country.
He said that Board of Investment has been entrusted with the task of identifying irritants and an extensive exercise is underway to project the irritants which will be removed in the new budget.
On macro-economic situation, he claimed that economic stability has been achieved and new era of progress and growth begun.
He claimed that growth rate is plus 4.5 percent and the tax collection has increased by considerable percentage of 15 percent.
He said that his claim of running on the path of economic prosperity is also tenable by looking at the growth in exports by 19 percent.
Good crops is another addition to alleviate the growth rate, he said.
He said that indicators of forex reserves crossing $ 10 billion, inflation rate 3.5 percent, exchange rate policy helping the stability of rupee, is to the advantage of consumers.
Shaukat Aziz told the business community, loud and clear, that fiscal incentive era “is over” and explained the rationale behind the WTO scenario which is based on the survival of the best.
The agenda of the government is also to pull out the businessmen from the psyche of fiscal incentives.
He also dispelled the impression about tariff-free trade in the future. “The government is determined to keep the option of imposing duties as and when and where these will be necessary,” he said.
On the point of import substitution that many countries have difficulties to adjust with the system, businessmen of Pakistan are adjusting well.
He made it clear that fiscal policies are indigenous thought and not IMF agenda as is misconceived.
He warned businessmen not to seek or expect tax holidays and incentives from the policy makers.
He informed the gathering that he has asked the bankers to reduce the mark-up rates and pass on the difference between lending and borrowing to the deserving.
On the question of providing huge support from the tax revenue to KESC to the tune of Rs 15 billion, he said he wished that he could avoid this situation as otherwise this money could help in raising the city's infrastructure and development works.
He described the income tax law as a “superb” law and in spite of resistance from tax practitioners he has forced his way in promulgation of this law. Income tax law, he said, is hassle-free and provides no room for making of rules by Income Tax officials.
On sales tax he said it was his humble advice that business community should learn to keep books of accounts which have the quality deterrence to no opposition by auditors.
“Your own books of account are accountable to creation of grievances as the auditors look into the books as there is no other way to check the discrepancies.”
The reason why business community feels agitated about the sales tax is that it is based on self-assessment system.
Any hanky-panky in accounting is caught in the audit. “If you have good books you do not have to worry,” he said.
Earlier Riaz Ahmed Tata, President, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in his address of welcome emphasised the separation of tax judicial system from tax collection machinery, reduction in tax record retention period from present five years to three years and strengthening of federal tax ombudsman institution.
Shaukat advised the President, FPCCI, to immediately forward business community's views on different issues confronting trade, industry and exports so that the same could be incorporated in the budget if found reasonable.