LAHORE: The All Pakistan Business Forum has strongly opposed the decision to impose a new 0.6 percent withholding tax on all banking instruments valued at more than Rs 50,000.
Criticising the new tax, APBF President Ibrahim Qureshi termed it an unnecessary burden, which will be very detrimental for the already-weak business and trade activity in the country. It would surely hike up inflation by increasing the operational costs of business community and small industrialists, who are already facing great hurdles.
Recently, the Senate’s Standing Committee on Finance and Revenue had supported the imposition of 0.6 percent withholding tax on all banking instruments valued at more than Rs 50,000 for non-filers of returns. The committee discussed the Budget 2015-16 and agreed to impose a 0.3% tax on all banking transactions for tax filers and 0.6% for non-filers for each transaction exceeding Rs 50,000. Besides cash withdrawals, these tax rates would be applicable on demand draft, pay orders, SDRs, CDRs, STDR, call deposit receipt and RTCs.
Commenting on the new tax, the APBF president said, “Although the APBF fully supports the government’s efforts to expand the tax net and inspires its thousands of members to pay taxes and file their returns, the business community has serious concerns over such indirect taxation, which is certainly not advisable for low-income economies like ours, where the common citizens are financially over-burdened. Imposition of such indirect taxes in Pakistan will severely discourage financial activities through banks and regulated institutions. The common man will be inclined towards avoiding this tax through unregulated and illegal financial channels. This will result in big revenue losses for the government.”
He said that it is more advisable to create healthier revenue streams for the government, by formulating more direct taxation, to specifically target big tax evaders, wealthy segments and high-profiteering enterprises with annual incomes exceeding Rs 50 million. “The government should also consider reducing the GST on electricity to nurture small industries and businesses.”
Ibrahim Qureshi demanded the federal government to refrain from imposing this withholding tax and work towards providing relief to the industry and ultimately to the common man. “Statistics show that only 791,000 individuals out of a population of 180 million filed their tax returns in 2014. This shows a really dismal picture. However, it does not mean that the government can flog the poor man to pay for the rich man’s offenses. The government on one hand proclaims to be aware of the poor man’s plight and pledges to make every effort to control inflation, but on the other hand it is imposing such harsh new levies.”
He said that several trade associations and the business community are contemplating a protest strike on July 7 against such an unfair taxation.
