Money trail must for offshore assets’ owners: Asad

ISLAMABAD: Federal Minister for Finance Asad Umar Thursday made it abundantly clear that those having offshore properties had no option but to give the trail of their money.

Addressing a post-mini budget press conference at the P-block here, he said the government had obtained assistance from friendly countries, including Saudi Arabia and the UAE, at the rate of over 3 percent.

“Have patience, as the financing facility from China will be finalised in next couple of weeks. The alarm bells on economic front have already ended,” he added. Asad said the government would not bow down to the IMF or any other international financial institution and would finalise an agreement with the Fund only when it suited the country interest.

He ruled out the possibility of imposing any new taxes to bridge the revenue shortfall. He said budget deficit could be curtailed with the new settlement of Gas Infrastructure Development Cess (GIDC) approved by the federal cabinet, as the government had linked the reduced rate by 50 percent with clearance of past liabilities on the basis of individual companies of all sectors.

Through this mechanism if changes are approved by Parliament to the GIDC law and all companies clear their 100 percent liabilities of different sectors then the government estimates Rs200 billion recovery, he said.

With this GIDC settlement, the price of urea fertilizer would reduce by Rs200 per bag for the domestic market. Minister of State for Revenue Hammad Azhar, Adviser to the PM on Commerce Abdul Razak Dawood and Chairman FBR Mohammad Jehanzeb Khan accompanied the minister.

Equating Pakistan’s case with a patient lying in the ICU for surgery, the minister said the surgery phase on the economic front had been accomplished and now the second phase of achieving domestic expansion through investment and industrialization in terms of reducing cost of doing business had kick-started for boosting exports.

“This is the way for reducing the current account deficit on medium term basis, he said, adding that it might not have much impact in the remaining months of the ongoing fiscal year.”

When the minister was asked about differences in the PTI ranks and Jehangir Tareen’s opposition of him, the minister said he enjoyed full backing of the prime minister as whatever he forwarded to him was always endorsed.

“Whatever faults exist in economy, the premier cannot be held responsible,” he added. into the supplementary finance bill to benefit Aleema Khan, the minister said she had paid the penalty in accordance with the Supreme Court orders and got herself cleared.

Asad said the government inherited yawning twin deficits as the current account deficit had peaked to $19 billion without facing any external shocks while the budget deficit was standing at 6.6 percent of GDP.

The government, he said, had taken measures to suppress demand as import compression was done through fiscal measures and monetary steps were taken by the State Bank of Pakistan.

“Some improvements have been achieved but still more steps are required,” he added.The external financing gap, he said, was fulfilled by the friendly countries mainly because of credibility enjoyed by Imran Khan and this success had never been seen in the history of Pakistan.

“We are expecting more financial assistance in next couple of weeks,” he maintained.Pakistan’s economy, he said, faced three major problems: 1), budget deficit and current account deficit; 2) second lowest investment to GDP ratio; 3rd), lowest savings to GDP ratio.

“When domestic savings failed to fuel growth then the country plunged into balance of payment crisis on frequent basis. With this mini-budget, the government has started implementing its reforms agenda to fix structural problems as investment and savings will have to be promoted to make industry competitive and boost exports.

When asked about measures taken in the mini budget to bring any relief to the common man, the minister said promotion in investment would create more jobs and good performance by the agriculture sector would bring relief in the lives of farmers.

The minister complained that before their return from foreign visits it had been portrayed that the visit had failed, as Saudi Arabia and the UAE had already announced their packages and China would announce its financing package in a few days.

He said there was no amnesty scheme in the finance bill and only the duration for receipt of tax on offshore assets had been decreased.

He said tax on property under the FBR’s old procedure took more time, the new insertion into the supplementary bill would take less time but it did not mean those, including Asif Ali Zardari, refusing to share the trail of their money would be exempt from committing the crime of money laundering.

He said only those giving the trail of their money would be exempt from the application of money laundering law.On market access from China, Adviser to the PM on Commerce Abdul Razak Dawood said the Pakistani team would be visiting China next week as they had identified sectors and products like textile, sugar and others where the exports would be increased.

Minister of State for Revenues Hammad Azhar said since the data on offshore companies was coming from abroad, that’s why provisional assessment for offshore assets clause was inserted into the supplementary finance bill that had already been applicable to the local data.

He said they had proposed increase in powers of the FBR for speedy recovery of taxes.On money laundering, he said the FBR did not look into anti-money laundering related clauses as it fell into the domain of FMU and other law-enforcing agencies.

He said the FBR’s campaign against high net worth individuals was underway as data integration was being developed with the help of other agencies and departments to identify potential tax evaders.

He also claimed that the FBR would recoup its shortfall and achieve the desired tax collection target of Rs4,398 billion.Giving reasons for Rs158 billion shortfall in the first six months, he said the government continued to lower GST on POL products causing revenue loss of Rs40 to 50 billion.

“Now the GST rate has been capped at the standard rate of 17 percent,” he said and reminded that the GST rate on POL products stood at 52 percent in the PML-N-led regime.The prepaid tax on telecom, he said, was suspended by the Supreme Court due to which the FBR suffered an estimated revenue loss of Rs70 billion. The ban on property and vehicles for non- filers also caused revenue loss, he added.

When the minister was asked to justify ‘own’ received by the car manufacturers on delivery, Asad said there was no justification at all for charging ‘own’ and directed the adviser commerce to convene a meeting of car makers tomorrow (Friday) for resolving this unjustified move.It would be simply a fault of the government if the car manufacturers continue to get ‘own’, he added.