PESHAWAR: Minister for Finance and Revenue Muhammad Aurangzeb reiterated on Wednesday the government’s plan to carry out reforms in the Federal Board of Revenue (FBR), saying that the government was taking steps to reduce human intervention in tax collection.
“When human intervention lessens, leakage will lessen — which is a milder word for saying corruption,” the finance czar said while addressing the business community in Peshawar.
“One structural step that we have taken is that the tax policy has been taken out of FBR and placed in the finance ministry,” he added.
To meet the International Monetary Fund (IMF) terms, the government in February separated the tax policy from the tax-collecting body and notified the creation of the Tax Policy Office (TPO), headed by the finance minister.
The government separated FBR’s policy wing from the operations agreed with the IMF and placed it in the Ministry of Finance. However, this process will take a few months so the placement of the Policy Wing in the Ministry of Finance could become operational from the next fiscal year 2025-26.
According to the notification, the Tax Policy Office will lend support to the analysis of tax policies and proposals through data modelling, revenue and economic forecasting as well as the country’s international tax treaties and obligations.
The Tax Policy Office will report directly to the Minister for Finance. The staffing to the said office as approved by the federal cabinet, shall be undertaken with the approval of the Establishment Division and Finance Division as per terms and conditions prescribed by the government.
Addressing the attendees at the Peshawar Chamber of Commerce today, the finance minister said that the country’s economy was moving towards stability, noting that the country was yielding positive results through the economic measures taken by the government.
Furthermore, he said, the government was taking input from the business community for the upcoming budget, vowing to continue supporting all sectors in all provinces.
Regarding the state expenses, Aurangzeb said the government plans to shut down more departments as part of an IMF-driven “rightsizing” exercise. “Efforts are being made to reduce state expenditure…we are shutting down more departments and attached departments,” he added.
The federal government has formulated a rightsizing programme by abolishing various ministries and their attached departments to reduce expenditures and improve government efficiency.
In January, Aurangzeb vowed to rightsize 42 ministries and their 400 attached departments by June 30 of the current fiscal year, adding that the rightsizing committee would reduce 80 institutions to half.
“60% vacant regular posts — that have not come in payroll — which stood at 150,000 have been abolished or declared as dying posts, creating a real financial impact,” he had said.
Recently, the federal government abolished the Ministry of Aviation and merged it into the Ministry of Defence. Through this merger, the government was eyeing a saving of Rs145 million annually.
FinMin meets KP’s finance adviser
Separately, the finance minister held a meeting with Adviser on Finance to Khyber Pakhtunkhwa Chief Minister, Muzzammil Aslam in Peshawar. The meeting was also attended by Minister of State for Finance Ali Pervez Malik, KP Excise Minister Khaleeq ur Rahman, and KP Chief Secretary Shahab Ali Shah.
On the occasion, Aurangzeb congratulated the KP government on implementing the National Fiscal Pact and Agricultural Income Tax.
He assured the provincial government of reviewing its concern over the National Finance Commission (NFC) Award, noting that they want to work together with all provinces.
Meanwhile, Aslam claimed that Centre has stopped funds for merged districts under the Accelerated Implementation Programme (AIP) and Annual Development Programme (ADP). “The merged districts were getting Rs66 billion in the current budget, while the expenditure is near Rs104 billion,” he added.
The finance adviser called for making interim arrangements from the NFC award to address the expenses of merged districts. He also asked Aurangzeb to settle matters related to the next budget with the provinces in advance.
Furthermore, he asked that the provinces should be taken into confidence in advance on tax enforcement, salary and pension issues.
