ISLAMABAD - Islamabad Chamber of Small Traders (ICST) on Sunday said withholding tax (WHT) on banking transactions should be abolished or reduced in the upcoming budget.

The government has imposed additional taxes worth over trillion of rupees since it came to power but WHT on bank transactions has attracted more opposition than any other tax, said Islamabad Chamber of Small Traders Patron Shahid Rasheed Butt.

He said that business community has not accepted this tax and invented different way to avoid it that include trade in dollars, parchi system, cash transactions and parallel currency. He said that authorities should consider abolishing the WHT on bank transactions or reduce it to acceptable limits as continuity of this tax is against the national interests.

The business leader said that it is responsibility of the government to make successful the existing policy of improved revenue generation. All the policies to increase revenue had backfired due to overdependence on the tax bureaucracy which is not aware of the ground realities, he said.

He said that determination of Finance Minister Ishaq Dar on the issue of WHT is laudable but some reservations of wholesalers and retailers must be taken into account. Moreover, banks are facing severe liquidity crunch after imposition of WHT which call for some steps, he demanded.

He said that authorities have always preferred indirect taxation while avoiding income tax which is not in the national interest. The government should consider reversing the WHT on bank transactions otherwise situation will not improve, he warned.

The government should prefer imposing direct taxes and improve export and investment situation at any cost as the country cannot survive on foreign loans forever, he added.