Finance minister rejects proposal for tax amnesty scheme .
Finance Minister Ishaq Dar on Wednesday conceded key demands of traders but rejected a proposal for general tax amnesty scheme, which could settle a four-month-long standoff between the government and the business community.
Speaking at a news conference after his meeting with traders, Dar said the two sides have reached an agreement on all but two of the demands. Flanked by office bearers of the All Pakistan Anjuman-e-Tajiraan (APAT) and officials of the Federal Bureau of Revenue, Dar said committees would be set up to finalise modalities for implementing the demands.
These committees will have a month to submit their reports after which the ‘trader’s package’ will be announced along with a new threshold of withholding tax on banking transactions.
“We believe a special tax treatment of small traders is important for ensuring their contribution in taxes, and at the same time, assure them that they would not be harassed by tax collectors,” the finance minister said in response to a question as he argued that fixed tax would benefit small traders.
APAT Chairman Khawaja Shafiq and General Secretary Naeem Mir said the government has promised to give a legal cover to the traders’ package through an ordinance after November 15.
The finance minister explained that the government had refrained from announcing a ‘traders’ package’ before the NA-122 by-elections so as to avoid it being struck down by the Election Commission’s code of conduct.
There was talk of a general amnesty scheme among the 18 demands of the traders. But insiders said Dar rejected the demand to legalise hidden assets of traders by paying 0.1% of the value of the assets in taxes.
The government and traders have been at loggerheads at a 0.6% withholding tax on all banking transactions by tax non-filers through the Finance Act 2015. After prolonged negotiations, the government reduced the rate to 0.3% for an interim period.
Last week, the government and traders had agreed in principle to further reduce the withholding tax threshold to 0.2% till December 31 before reverting to 0.6%. Currently, the effective withholding tax rate till October 31, 2015, as effected through an ordinance, is 0.3%.
The meeting last Friday had also agreed to raise the threshold of the transactions, which will be exempted from the withholding tax rate, will be increased to Rs100,000 against the current threshold of Rs50,000.
The Khalid Pervez Group, which enjoys backing of Chief Minister Punjab, again boycotted talks with the government.
The government on Wednesday also moved to pacify the influential textile millers who had observed black day against a delay in acceptance of their demands.
“The IMF is not a hurdle and a comprehensive textile package will be announced by end of October”, said Haroon Akhtar Khan, the special assistant to Prime Minister on Revenue. He, however, maintained that the package will be given while remaining within the available fiscal space.
Textile millers are demanding relief in indirect taxes, reduction in electricity tariffs and payment of tax refunds.
Published in The Express Tribune, October 15th, 2015.