New RCCI president urges authorities to focus on expanding the tax net to bring down tax rates
ISLAMABAD: In order to improve atmosphere for business in country, the government should endeavour to introduce a balanced tax system instead of burdening the existing taxpayers with imposition of huge taxes.
This was stated by Rawalpindi Chamber of Commerce and Industry (RCCI) newly elected President Raja Amir Iqbal during an interview with Customs Today. Expanding tax net will not only bring down tax rates but also pave the way for doing business in country, he added.
Most of the world economies depended on direct taxation, but the situation in Pakistan was the other way around where direct taxes stood at 40 percent but indirect taxes at 60 percent, he revealed, adding that the government would have to dig out ways to increase direct taxes if it was willing to improve the atmosphere. The direct taxes stood at 37 percent when incumbent government took over the office, he further said.
The government claimed to have around 1,100,000 taxpayers in the net, he said, adding that there were 800,000 companies and persons after excluding salary-based taxpayers from the total whose taxes were running the state affairs.
Most of the population of country was utilising petroleum products, electricity and gas and other utilities, he said, adding that indirect taxes and non-tax revenue were being paid by all of them.
He said that the FBR lacked constructive capacity, besides facing problems of modernisation and technology, adding that it would have to overcome the issues in order to bridge the gap between taxpayers and the department.
A decline in exports, demand and savings put a negative impact on the purchasing power of the people, he said, adding that euro, pound and dollar also observed a downward trend against Pakistani rupee. When rupee will be strengthened, the exports will decrease, as cost of doing business increased for importers of foreign countries.
He also suggested that the government should review the policies of neighbouring countries where mark-up rates were reasonable and five percent rebate was offered on exports. But in Pakistan, Rs 450 billion were stuck in wake of sales tax refund with the government.
The government should give exemptions and facilities to the exporters in order to compete in international markets, otherwise the exports will face huge decline, he informed.
If government failed to bring peace, rates of energy and labour rate on par with neighbouring countries, the business will not develop further in future, he said, adding that inflow of cheap products causing closure of local industries.
“Real business is the one that eliminates unemployment and brings about prosperity for the people, but there prevail no such signs,” he said.
He said that the FBR should link the connections of all utilities with tax returns and guide the people about disconnection on not depositing the taxes. The government will have to take measures to trace the non-taxpayers of real estate sector where according to the government Rs 5,000 billion have been invested, he said, adding that at least three to four million people should be brought into tax net.
