KARACHI: Participants in a seminar on the present tax regime were of the opinion that weaknesses and complexities in the taxation systems are growing and need structural and operational reforms.

The seminar was organised by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in collaboration with Policy Research Institute of Market Economy (PRIME) and was addressed by leading think tanks, business experts, economist, including Dr Ikram-ul-Haq, Ali Salman CEO (PRIME), Hanif Lakhani, Nasir Khan, Adeel Siddiqui (FPCCI vice presidents), Sheikh Sultan Rehman, Engr M. A. Jabbar (FPCCI former vice presidents), members Budget Advisory Council of FPCCI and trade and industry representatives.

FPCCI former vice president Jabbar, in his opening remarks, said that complications and irritants in the present tax systems should be removed for capitalising the available tax potential in the country.

Complexities in the taxation systems keep on increasing with every budget possibly due to reduced consultations with stakeholders by the Federal Board of Revenue (FBR). Business sector is overburdened as it has to resolve its tax issues instead of engaging in economic activities to contribute in improving economy of the country, Jabbar added.

He informed the participants of the seminar that the prime minister has responded to the suggestions of FPCCI president to simplify taxation for accelerated economic growth and directed the FBR to focus on tax reforms, simplify tax codes (federal tax laws), reduce discretionary powers of tax collectors and automation to bring transparency in tax system.

Jabbar said the FPCCI chief has also suggested the prime minister to introduce a simple, fair and predictable tax system; and customs duty and federal excise duty on imported items to protect the domestic industry.

FPCCI Vice President Hanif Lakhani raised the question of meeting collection targets in the shrinking growth, which has diverted FBR to over focus on existing registered tax payers.

FPCCI Vice President from Balochistan Nasir Khan said that businessmen are working to promote economic activities and retiring their all liabilities even in continued COVID-19 pandemic.

But it is unfortunate that FBR in calling the masses tax evaders instead of appreciating that even in difficult situation people have been paying taxes, he continued.

Dr Ikram-ul-Haq presented a tax reform model and answered various questions on tax related problems raised by the participants.

He said that he has designed a tax reform model that would bring paradigm shift in the taxation structure of Pakistan. The model will align with incentives required to promote economic growth and induce compliance.

Dr Ikram suggested that rate of tax should be flat and lower with broad tax base. The complained that taxpayers have to deal with multiple revenue and non-revenue agencies who impede and discourage them instead of creating an environment for exploiting the available tax potential.

He said that at present, all broad-based sources of revenue are with the federal government and contribution of provinces in total tax revenues [Rs 4,748 billion] for the fiscal year 2019-20 was merely 8 percent, and in overall national revenue base (tax and non-tax revenue) of Rs 6,272 billion, it was 9 percent against the total national expenditure of Rs 9,648 billion. All provinces together generate taxes of Rs 414 billion and non-tax revenues of only Rs 102 billion.

He said that a flat-rate taxation system could resolve the issue of complex income taxation, similarly, single-stage sales tax, single-rate customs duty and National Tax Authority and Federal Tax Tribunal under judiciary are suitable options to replace the outdated system.

PRIME CEO Ali Salman briefed on simplification of taxation structure on which his organisation is working to boost the economy of the country.

LEAVE A REPLY

Please enter your comment!
Please enter your name here