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Thursday March 28, 2024

Raise in exports must to address economic imbalances: FTO

By our correspondents
January 20, 2018

KARACHI: Federal Tax Ombudsman (FTO) Mushtaq Ahmad Sukhera has said increasing exports is the only viable solution to address economic imbalances.

Addressing the businessmen of the Value-Added Sector at Pakistan Hosiery Manufacturers and Exporters Association (PHMA) House on Friday, he said widening trade and current account deficit and lowering exports were alarming for the economy.

“Instead of taking measures to improve exports, the sovereignty has been mortgaged,” he said, while pointing at the issuance of sukuk bonds and foreign loans.

Some time back annual exports had climbed to $25 billion, which later declined to $20 billion, he said, and added, “If exports increased to $30 billion instead, the country had no need to go for foreign loans.”

The FTO said the government should resolve the problems faced by exporters on war footing.

He also pointed out the volatile exchange rates and said it would be difficult for the industry to determine prices for exporting goods.

He expressed dismay over the low tax-to-GDP ratio and said our neighbouring economies have much better rates. He said India’s ratio hovered around 18-20 percent of the GDP. Even Bangladesh and Sri Lanka have better ratio than Pakistan.

The FTO said there was a trust gap between the Federal Board of Revenue (FBR) and taxpayers. “The tax machinery has created trust deficit and people do not want to come into the tax net,” he added.

The FBR should change its priorities and pursue potential taxpayers, instead of harassing existing ones. “Once an audit notice is issued, a taxpayer faces problems,” he said.

The ombudsman asked the FBR to change its attitude.

“The FBR should change audit parameters and instead of harassing the genuine taxpayers, the priority should be identifying suspicious transactions,” the FTO suggested.

He assured the business community of strict action in the refunds cases, where the Refund Payment Orders (RPOs) have already been issued by the FBR. Talking about the withholding tax regime, the ombudsman said the FBR has made it an easy tool for revenue collection. “The FBR should reduce dependency on this source of collection and focus on direct tax collection,” he added. In the past, some withholding agents had collected the amount, but did not deposit it to the national kitty, Sukhera said, and added that in fact the FBR lacked the capacity to monitor withholding agents, such as cell phone service providers. However; “now the FBR has built its capacity to audit the withholding collection by cell phone service providers,” he added.

Earlier, Muhammad Jawed Bilwani, chairman, Pakistan Apparel Forum, and chief coordinator, Value-Added Textile Export Sector highlighted numerous difficulties faced by the exporters.

Bilwani said the exporters were not given due importance in the past, which caused the decline in exports. He urged the FTO to take suo moto action and resolve refunds issues. He claimed that about Rs250-Rs300 billion refunds under various heads were stuck. “This was creating liquidity issues for exporters,” he added. Bilwani said under the law, once the RPO is issued, the FBR must release the payment within seven days; a provision the revenue body is violating.