LAHORE - Presidential candidate of Federal of Pakistan Chambers of Com­merce and Industry (FPCCI), Atif Ikram Sheikh has said that reli­ance on indirect taxes should be reduced to push the country to­wards rapid development.

Dependence on direct taxes is necessary for national develop­ment, but progress towards this is very slow, he said in a state­ment issued on Sunday.

Atif Ikram Sheikh, who has also served as VP FPCCI, Chair­man PVMA, and President ICCI, said in a statement issued here today that reforms should be in­troduced in the tax administra­tion to improve its workings.

Reliance on indirect taxes and withholding taxes are damaging; therefore, basic structural chang­es are needed for documenting the economy to increase reve­nue, he said. The business leader stressed that the policy mea­sures would expand the tax base, eliminate tax gaps, and enhance the efficiency of the tax system. Many hurdles in tax collection can be overcome by employing technology, as is being practised in other countries where tax col­lection is satisfactory.

The use of information tech­nology is necessary to maximise tax compliance, enforcement, tax base broadening, facilitation, and transparency, he said.

He noted that indirect taxes disproportionately impact vul­nerable segments of the popu­lation. They take away a larger proportion of income from low­er-income individuals compared to those with higher incomes.

Direct taxes contributed 37.2 percent of total FBR tax collec­tion, while indirect tax contri­bution was 62.8 percent, and within total FBR collection, sales tax remained the top rev­enue-generating source with a 41.2 percent share, customs duty 16.4 percent, and FED 5.2 percent, respectively. Atif Ikram Sheikh said that a substantial portion of the population is en­gaged in the informal economy, where incomes are irregular and often insufficient.

Indirect taxes, being con­sumption-based, affect these individuals more because their entire income is spent on neces­sities, and they may not have the financial buffer to absorb the impact of increased prices. Indi­rect taxes can limit the capacity of the poor to save and invest in income-generating opportuni­ties. With a significant portion of their income going towards in­direct taxes and basic expenses, they have less room to save and invest in education, skills devel­opment, or small businesses.

The FBR should prioritise bringing untaxed sectors within the purview of taxation rather than further burdening the poor­er segments that are already subject to indirect taxation.

He demanded that the gov­ernment expand the tax base by bringing more people into the tax net and move towards the policy of progressive taxation for higher-income groups. Our taxa­tion structure favours the rich and leaves the poor behind, while reforms can ensure the economic safety of the poor class.