Coalition govt pushes ahead with PIA’s privatisation

In its quest to overhaul loss-making state-owned enterprises (SOEs), the Shehbaz Sharif-led coalition government is pushing ahead with the privatisation process of Pakistan International Airlines (PIA).

While chairing a high-level meeting on the PIA’s privatisation and restructuring of the Federal Board of Revenue (FBR), Prime Minister Sharif directed the Ministry of Privatisation to submit the schedule for the PIA’s privatisation in the next two days after taking essential steps.

During the meeting, the participants reviewed the progress on the privatisation of PIA and considered the next phases of the process.

According to the state-run news agency, the PM warned that no laxity and irresponsibility would be tolerated and said that complete transparency should be ensured in all phases of privatization.

The proposed roadmap for the system of automation of the FBR was also approved in principle.

The participants considered in detail the proposals for transparency in the system of FBR, infrastructure reforms according to international standards, increase in taxes through incentives, eradication of corruption and smuggling, separation of inland revenue and customs departments, and decrease in tax rates.

The PM said that the roadmap should be implemented with clear-cut timelines. The targets should be determined realistically but the implementation of reforms should be the fastest in the region, he said, adding the targets could be achieved with round-the-clock work as “we do not have time to waste as it is a matter of the future of Pakistan and economic recovery”.

The meeting sought recommendations from the Ministry of Law for the resolution of legal disputes in the pending cases of tax recovery and revenue in courts.

PM Shehbaz instructed that the hurdles in the recovery of Rs 1.7 trillion in stuck-up taxes should be removed with the resolution of legal disputes.

He also directed the Ministry of Law to present proposals to create a legal department in the FBR, for the preparation of drafts according to law and the hiring of services of lawyers.

He said six to seven percent economic growth was possible with the implementation of reforms, adding that investment was needed to modernize the revenue and tax system.

“We want to bring a system of taxation based on incentives. We desire to reduce the burden of taxes but the business community has to help by playing a role for the progress of people through social service.”

The prime minister asked that an effective third-party audit system should be ensured, which so far has not been done.

He said that a tax system with high quality was in vogue in the world and “we also have to improve our system”.

He urged that all exemptions in taxes should be thoroughly reviewed.

He was of the view that Pakistan would not have been left behind in the world if small and medium enterprises were promoted. “We could not promote our small and medium industry in the last 40 years. Now is the time to expand this sector.”

Former caretaker minister for finance Dr Shamshad Akhtar gave a detailed briefing about the restructuring of FBR, automation, and different aspects of the loopholes in the collection of taxes and the future strategy.

She informed the meeting that Pakistan’s tax to GDP was 9.5 percent which was low as compared to other countries and it was very necessary to increase it for progress and development.

She said that 55.6 percent of the population did not pay any taxes while only 3.3 percent paid taxes. Only 200,000 people were giving 90 percent of the taxes.

She said that a recovery of Rs 1.7 trillion of taxes could not be made because of the legal process.

She highlighted the recommendations for restructuring of the Customs Department on the pattern adopted by other countries and reforms in the legal and regulatory framework.

The Federal Policy Board should prepare a long-term tax plan for the continuity of policy, she added.

At the start of the meeting, the prime minister welcomed Dr Shamshad Akhtar and thanked her personally for her efforts.

He said it was a reality that Senator Ishaq Dar laid a strong foundation with the International Monetary Fund (IMF) which made the progress possible afterward.

He appreciated Dr Shamshad Akhtar for her comprehensive presentation.

Senators Ishaq Dar and Musadiq Malik, Khawaja Muhammad Asif, Attaullah Tarar, Shiza Fatima Khawaja, Romina Khurshid Alam, and Ali Pervaiz Malik; Rana Mashhood Ahmed  Khan Ahad Cheema; Deputy Chairman Planning Commission Dr Jehanzaib, State Bank Governor, FBR Chairman, Secretary Privatization and other high-level officials attended the meeting. 

Prominent banker Muhammad Aurangzeb took part in the meeting through video link.