Finance Adviser Hafeez Shaikh stresses need for harmony in tax system

ISLAMABAD (92 News) – Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh has said the federal and the provincial governments are in a continuous dialogue to improve coordination and create harmony on issues related to fiscal and budget management, multiplicity of tax rates and reconciliation of input adjustment. He made this observation while chairing a meeting at the Finance Division to review the implementation of fiscal policies in the provinces under the IMF Programme. Dr Hafeez Shaikh pointed out that harmonisation of taxation and other fiscal issues within the constitutional framework was a challenging process but a continuous dialogue and coordination between the centre and the provinces and between the provinces themselves had resulted in better budget and expenditure management while definitional issues related to what constituted a service and what rate of tax applied to it in different regions were also being resolved in a spirit of mutual understanding and accommodation. Visiting IMF Mission Chief Ramirez Rigo Ernesto, Punjab Finance Minister Makhdum Hashim Jawan Bakht, Khyber Pakhtunkhwa Finance Minister Taimur Saleem Khan Jhagra, Balochistan Finance Minister Zahoor Ahmed Buledi, Federal Secretary Finance Naveed Kamran Baloch, Special Secretary Finance, Government of Sindh, Baqir Abbas Naqvi and other senior officials from the Finance Division and local IMF officials were also present. The provincial ministers from Punjab, Khyber Pakhtunkhwa and Balochistan as well as officials from Sindh also shared their experiences and briefed the IMF Mission chief about various measures and strategies put in place in their respective provinces to achieve better fiscal and budget management. IMF Mission Chief Ramirez Rigo Ernesto said that he was impressed by what he described as good financial and fiscal management and maintenance of expenditure within the budget. However, he stressed upon a full use of the development budget to achieve the development goals. He also emphasised upon harmonisation in the tax system and creation of a single tax base as it directly impacted on the ease of doing business and went a long way in creating an enabling business environment and boosting confidence of the investors and businessmen. Ernesto added that Pakistan had a continental size economy, much like the Western Europe where everybody had the same definition of the tax rate and services, and the same could be achieved in Pakistan through uniform tax rates and a single tax administration instead of two or three tax authorities in each province. He appreciated the current level of understanding between the centre and provinces and hoped such efforts would continue to build consensus and bring about greater harmony through a harmonised mechanism.