LAHORE - The business community has called upon the government to reduce the existing 17 percent sales tax rate to the single digit in the forthcoming budget 2021-22, as it would help promote the business activities, besides improving tax revenue as well in the country.
Pakistan Industrial and Traders Association Front (PIAF) Chairman Mian Nauman Kabir, in a joint statement with vice chairman Javed Siddiqi, said that the main advantage of reducing sales tax to single digit will be giving relief to the common man, especially to the low and middle income group by reducing the inflation. He said that the lower rate of sales tax will increase the revenue, and discourage malpractices in input and adjustment. It will give the industry a breathing space against the menace of smuggling, which is widespread in the country. The simple procedures in sales tax will give the government an opportunity to work more efficiently within the sales tax department.
He observed that the government has not taken stakeholders onboard to discuss the upcoming budget. The objectives of our budget proposals should be revamping taxation system, documentation of economy, employment generation through industrialization, promoting a responsive and equitable taxation system, infrastructure development and trickledown effect of the fiscal space to the grass root level.
The PIAF fully supports the recommendation of FPCCI and LCCI to reduce sales tax rate gradually from current 17 percent to single digit, to abolish all duty and taxes on the imports of all machinery and imposition of taxes on final goods, he added. Mian Nauman also suggested establishment of export warehouses at border for enhancement of trade with neighboring countries and bringing the agriculture and service sectors into tax net proportionately. He also proposed to increase the education and health budget for improving human capital in Pakistan.
He suggested that government should use the data of domestic and international travelers for identifying potential tax payers and bringing them into tax net.
He underlined the need for promotion of SMEs culture in Pakistan and suggested that the government should formulate mechanism for monitoring consumer goods prices.
He also requested the government to take the business community on board in finalization of agreement with IMF and highlight IMF conditionalities publicly.
PIAF vice chairman Javed Siddiqi said that the economy of Pakistan was facing many challenges due to falling exports, rising trade and current accounts deficits and reducing foreign exchange reserves.
He endorsed the government plan of FBR reforms to expand the tax base under a fully-automated system, which should need to be improved as it has still many flaws. He said that making the FBR stronger through improved tax collection will be immensely beneficial for the country.
He said there is a need to build a structure in the country, which is in accordance with the requirements of time, as it is easy to weaken institutions but it takes a long time to rebuild them.
Javed Siddiqi also advocated for equitable taxation while emphasizing on expansion of tax net, rather than putting more burden on the existing taxpayers.
He said that the FBR acts as the backbone of our economy and its automation and integration of the data would ultimately broaden the tax base and the government would be in a position to reduce rates of taxes and lessen burden on the existing taxpayers.