May 31, 2022: The Institute of Chartered Accountants of Pakistan (ICAP) initiative of preparing Model Federal Budget 2022-23, along with ICAP proposals for Federal and Provincial Budget 2022-23 and presenting it to the Ministry of Finance is a very praiseworthy professional exercise, said Mr. Zeeshan Ijaz – Chairman Economic Advisory Committee.
With these proposals contributing to the budget-making process, the Ministry of Finance will be able to have an understanding of the expectations of different segments of the economy from the next fiscal’s policy.
An interactive session with journalists was held where President ICAP – Mr. Ashfaq Yousuf Tola accompanied by Chairman Fiscal Laws Committee- Mr. M. Ali Latif and Chairman Economic Advisory Committee – Mr. Zeeshan Ijaz informed the journalist that these proposals and recommendations have already been submitted to the government for consideration in new Fiscal Budget 2022-23.
Mr. Tola highlighted that the country made a sound economic recovery from the COVID-19 induced contraction, however, we are still facing greater challenges that are creating huge external sector pressures. The trade deficit and current account deficit had already exceeded their annual targets. There is steep currency devaluation, weaker domestic demand due to monetary tightening and fiscal consolidation and global economic uncertainty. In order to mitigate these challenges, the government needs to put in efforts for interest rate controls, emphasize on meeting tax collection targets as well as curb the challenge of mainstreaming a parallel economy. The purpose of Model Federal Budget 2022-23 is to compile recommendations to the government for economic reforms that can help improve the future outlook of the country. Some of the policy measures in this document are expected to bring in fruitful results for our economy by improving our GDP and controlling the fiscal deficit.
Moreover, the Model Budget has been drawn up keeping in view the impact of changing political circumstances, projections for the IMF, post-pandemic measures and global dynamics, he further added.
Mr. Zeeshan Ijaz – Chairman Economic Advisory Committee stated that in the case of Pakistan, whenever, the economy grew by over 5 percent years, the current account slippages resulted in balance of payment crisis and whenever the international commodity prices (primarily oil prices) were around or more than USD 100 mark, the twin deficit (fiscal and current) problems emerged for the country and as a result, it affected the growth and increased income inequality.
As of now also the country needs some economic emergency to steer it out of crises, accordingly, ICAP has submitted various proposals highlighting major areas of focus including investment in technology both in infrastructure as well as in terms of value addition and innovation, rationalization of subsidies, integration of Islamic banking and financial products at both private and federal dealings and significance of regulation in power and construction sectors.
Mr. M. Ali Latif – Chairman Fiscal Laws Committee stated that ICAP has submitted detailed Tax Proposals to FBR for consideration in the upcoming Federal Budget. He said that during a discussion with FBR it was agreed that focus should be to broaden the tax base along with Ease of Doing Business instead of increasing the tax rates.
He informed that Chairman FBR was also apprised on the various measures that can be taken by the tax department to reduce taxpayers’ difficulties and to ease tax compliances by addressing anomalies in direct and indirect tax laws i.e. ICAP has recommended that the FBR web portal should provide the facilities of online filing of the appeal effect applications along with the revised working which will facilitate taxpayers.
He informed that Chairman FBR had lauded the role of ICAP and thanked the President ICAP and Chairman Fiscal Laws Committee for the tax proposals furnished by the Institute. M. Ali Latif informed that the Broadening of tax base measures includes a proposal by ICAP to the government that the housing societies/developers/builders engaged in selling plots should integrate their systems with FBR on the same mechanism as POS integration and share real-time transfer of files/plots. He further stated that the Government should seriously consider withdrawal of all discriminatory tax exemptions/ concessions provided in the Second Schedule to the ITO 2001.
This should be done proactively rather than on the behest of the IMF.
He hoped that Government would consider the integration of federal and provincial revenue authorities across the country in such a way that it provides one window solution to the taxpayers without undermining the existence and independence of each authority.