Lahore - The All Pakistan Business Forum (APBF) has recommended the broadening of tax base through appropriate legislation in the upcoming budget to ensure that all wealthy people pay taxes equitably, including those belonging to the agriculture sector.
APBF President Ibrahim Qureshi said the culture of amnesty schemes should be eliminated, as it discouraged the honest taxpayers.
“Appropriate laws should be enacted to enable the government to seize local assets, in equivalent value, or levy appropriate taxes, if any person holds any kind of assets outside the country for which the source of income could not be established,” Qureshi demanded.
He said the export-oriented industries should be facilitated in the forthcoming Federal Budget 2016-17. “Rules, regulations and procedures for these industries should be easy so that they could play their due role in economic stability of the country,” he opined.
“It is a matter of concern that exports are declining despite the fact that the country has all the resources,” he lamented.
APBF president said it was expected that the exports would remain limited to $23 billion at the end of the ongoing financial year, which, he said, was not a good omen.
He called for focusing on investing in the energy sector, lowering of tariffs on smuggling prone items, increasing the share of direct taxes in the revenue and lowering the slab of indirect taxes in the forthcoming budget to achieve key economic targets set for the year 2016-17.
“In order to fill the gap between demand and supply of energy, maximum funds should be allocated for the construction of dams/water reservoirs and tapping of Thar coal,” he asserted.
Qureshi said the ‘Protection of Economic Reforms Act, 1992’ should be amended appropriately to curb the practice of remitting undeclared income through unofficial channels outside Pakistan and the same being brought into Pakistan through banking channels in Foreign Exchange.
He demanded the government improves tax structure so that business and investment could flourish in the country.
Qureshi was of the view that the existing tax structure discouraged investment and encouraged rent seeking. “A better tax system would help improve economic growth of the country, but unfortunately, the present tax system promotes rent-seeking while discourages entrepreneurship as it imposes heavy taxes on the business profits of traders” he added.
He requested the government to focus on reducing tax rates and expanding tax base by bringing all exempted sectors into the tax net. He suggested that the tax system should be so designed that it attracts moneyed class to invest.
He said the government should also seriously consider introducing mandatory trade license scheme for every trade, which would help in documenting the economy and enhancing tax revenues.
APBF Budget proposals recommended that the current sales tax regime of VAT mode should be reviewed and incase enforcement is not possible it should be overhauled, to eliminate corruption and the negative financial impact on businesses due to delay in refunds and provide level-playing field to the organised sector.
He said heavy reliance on withholding taxes is affecting the enforcement capabilities of the FBR administration since majority of tax collections is through the withholding tax regimes and not through enforcement measures.
The APBF expressed concerns over the extremely low foreign direct investment (FDI) in the country. It urged the authorities to introduce new tax incentives and extend the period of existing ones for attracting new foreign direct investments in line with the potential of the country.