LAHORE  - The business community has called upon the government to immediately withdraw the imposition of 0.3 per cent withholding tax on all banking transactions for filers as it has started discouraging banking transactions and promoting non-banking and cash transactions. They regretted that the tax authority is consistently neglecting the leakages of around Rs2,000 billion revenue and instead taking measures to increase tax burden on the compliant taxpayers.
Lahore Chamber of Commerce and Industry former vice president Kashif Anwar said that 0.3% tax on all banking transactions of over Rs.50, 000 in a day for non-filers was imposed in a bid to compel them to become filers. However, he apprehended that this decision will lead to many complications in the economy as it would cause drop in bank deposits, promote the culture of cash transactions, affect the profit margins of taxpaying businessmen and enhance turnover tax for filers.
He said the increased reliance of the government on withholding taxes could become counterproductive as it would further incentivize non-filers to conduct cash transactions and promote informal economy in the country. He said the imposition of this tax would also give rise to inflation as non-filers would pass on its burden to the common man who will have to pay high prices on purchases.
Kashif Anwar said that almost the whole business community of the country has strongly opposed this new tax and government should seriously consider its urgent withdrawal to avoid any disturbance to the business and economic activities.
He termed it unfortunate that government did not take business community on board before imposition of this new tax and stressed that it should shun the practice of taking unilateral decisions as such decisions could prove detrimental for promoting documented economy.
LCCI former vice president said the revenue authorities, including Federal Board of Revenue, should act as a facilitator for the business community. He said that tax avoiders are periodically bailed out through amnesty schemes while compliant sectors are heavily penalized on slightest delays in tax payments.”
LCCI president Ijaz Mumtaz said that the role of FBR should be to create conducive environment for economic growth through prudent taxation and enlarging tax base instead of stifling economy through short-term measures and letting the informal economy flourish, he said.
According to expert, 855,429 tax payers have filed income tax return for the year ended 30 June, 2014. Around 260,888 tax payers paid less than Rs20,000 tax, 240,072 tax payers paid from Rs20,000 to Rs999,999 tax, 17,477 paid from Rs1 million to Rs2.5 million tax, 7,237 paid from Rs2.5 billion to Rs5 million tax, 3,817 paid from Rs.5 million to Rs.10 million tax,3,500 paid tax worth Rs10 million and above and 322,438 tax payers paid zero tax.
They said these stats show a really dismal state of affairs of the FBR, which has not been able to add any taxpayer notwithstanding the fact that it claims to have complete data of around Rs3 million persons having taxable income.
What is stopping the FBR to bring these potential taxpayers under the tax net, he asked.