LAHORE - The business community has advocated the government to cut the corporate tax rate by 2 percent annually to bring it down to 25 per cent over the next four years from the current rate of 33 per cent while the individual income tax exemption should be raised from Rs400,000 to Rs600,000.
Federation of Pakistan Chambers of Commerce and Industry (FPCCI) president Mian Adrees suggested that all incomes including agriculture should be taxed. He recommended that income tax on agriculture should be increased and agriculture income should be brought under tax net, as agriculture sector contributed around 23 percent share in overall GDP of Pakistan, but its share in total tax collection was just two percent.
He also suggested the government to establish a single Business Registration Authority to maintain complete database of business entities, stressing that the sales tax and income tax return forms should be made simple and standardised so that taxpayers do not have to face the hassle of new tax return forms on an annual basis.
The FPCCI believes that sales tax should be non-adjustable and non-refundable and be collected at single stage at import or manufacturing. In value-added chain industry, GST should be collected at 0.5pc on each stage of value-addition to complete the chain.
LCCI former vice president Kashif Anwar observed that the country was passing through tough and difficult time and added that the budget may not have big changes nor bring big relief. Kashif Anwar said that it was high time for Federal Board of Revenue (FBR) to introduce business and industrial-friendly polices in the federal budget 2015-6. He said that FBR officials squeeze the existing tax payers to meet the revenue targets. It is also high time that taxation base be widened. Pakistan's overall tax-to-GDP ratio has remained stagnant at around 9 percent or so and in fact has shown a decline in recent years. During 80s and 90s tax-to-GDP ration was 12 to 13 percent, respectively.
He proposed that untaxed or under taxed sectors should be brought into tax net. Measures should be adopted to raise at least one percent tax to GDP every year till 2020.
He said that the increase in number of taxes always encourages people to stay out of tax net while cut in tax rates expands tax base therefore the government should rationalize tax tariffs instead of making any increase in their rates.
Kashif Anwar said that the prevailing rate of 17 percent sale tax was high as compared to other countries in the region and this high rate was root cause of tax evasion, corruption and smuggling.
He also proposed that the government should establish alternative energy ministry and opposed government proposal to merge textile ministry with commerce ministry. He said that India had already separated ministry for alternative energy.
Pakistan Industrial and Traders Associations Front (PIAF) called for a tax-free budget for the year 2015-16 to achieve economic goals set by the government. Malik Tahir Javaid said that the government would have to allocate more funds towards the energy generation projects as the shortage of electricity had already caused irreparable loss to the overall economy and the economic activities in the country. He said that it was imperative to achieve revenue targets that they are set realistically keeping in view the ground realities. He said that new taxes, means the more burdens on the existing tax payers that would ultimately increase the cost of doing business.
PML-N Traders Wing Punjab president Muhammad Ali Mian said that the fact remains that the Prime Minister Nawaz Sharif and the Finance Minister Ishaq Dar were putting in their best efforts to attract much-needed foreign investment in the country but their efforts would bear fruit only when the taxation procedures are simple and their rates are on the lower side. He said that the private sector should be facilitated for the creation of jobs as the government alone cannot provide jobs to all the unemployed graduates therefore the coming budget should be tax free having incentives for the manufacturing sector.