LAHORE                   -            Minister for Finance Makhdoom Hashim Jawan Bakht has said that consultation with stakeholders for budget preparation was priority as economic revival was not possible without their due participation. Speaking at a consultative meeting during his visit to Lahore Chamber of commerce & Industry on Monday, he said that major part of Annual Development Plan (ADP) was being spent on those projects that would promote trade and economic activities.

LCCI President Irfan iqbal Sheikh, Senior Vice President Ali Hussam Asghar, Vice President Mian Zahid Jawaid Ahmad, Chairman Punjab Revenue Authority (PRA) Zain-ul-Abiden Sahi, Chairman Punjab Board of Investment & Trade (PBIT) Jahanzeb Burana and Secretary Finance Muhammad Abdullah Sumbal also spoke on the occasion. The Minister said that a study has identified that abolishment of more than fifty taxes would not harm exchequer or Ease of Doing Business index. National Tax Council has been asked to play its role for tax harmonization, he said.

“We want to enhance tax-to-GDP ratio but not at the cost of economy”, he said and added that inspector less regime and digitalization would improve the EODB ranking. He said that work on E-payments system was underway and it would be implemented soon. He said that revival of construction sector was a must. He said that 16 per cent tax was imposed on this sector last year that has been withdrawn and a flat rate has been imposed. 

Irfan Iqbal Sheikh drew the attention of Finance Minister to the unexpected slash in the ADP expenditure over the time from Rs576 billion in 2017-18 to Rs350 billion in 2019-20. He said that it has negatively impacted the ongoing infrastructure projects and other development activities in the province and has also resulted in an economic slowdown. He said that there should be a considerable increase in the size of ADP for the year 2020-21 to stimulate economic activity. He said that sales tax on services was being charged at different rates by Punjab Revenue Authority (16%) and Sindh Revenue Board (13%) which creates an environment of competition among the provinces. Uniform rate of sales tax on services should be charged by all the provinces. He said that Punjab holds paramount importance in Pakistan’s Ease of Doing Business as Lahore holds 35% weightage in the calculation of overall ranking. “There is a tremendous potential of improvement in the paying taxes ranking as Pakistan stands at 161st position in this indicator”, he said. He said that LCCI has been advocating for a need to reduce the number of taxes and the frequency of the tax payments. “We appreciate the facility of online tax payments. However we demand that these payments should also be allowed to make through credit/debit cards. There is also a need for the reduction in number of provincial tax payments which are more than 120. Many of these taxes have small collection amounts i.e. less than Rs1 million and can easily be abolished or clubbed into other taxes”, the LCCI President added.

He said that some steps must be taken to separate tax collection from service provision, so that departments like PESSI stop sending inspectors for tax collection and better focus only on delivery of services like hospitalization, pensions, injury/death grants. He said that WASA charges of Rs100,000/month for one cusec for industrial, commercial, non residential and corporate bodies extracting water through tube wells was on a higher side. Keeping in view the high cost of doing business, these charges should be rationalized, he said. He said that to give boost to the pace of industrialization, there should be tax holiday for all provincial taxes and levies for at least 3 years for the newly registered companies, especially for SMEs. He said that Punjab infrastructure Development Cess puts an additional tax burden on the businesses using relatively expensive bonded carriers to transport goods from ports in Karachi and get them cleared at dry ports in Punjab. To avoid this Cess, many businesses in Punjab prefer to get their consignments cleared from Karachi. This also hampers the businesses of clearing agents and transportation companies that provide sizeable employment, he said while demanding abolishment of this cess.