ISLAMABAD: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has stressed the need for taking serious measures in close consultations with the real stakeholders to broaden tax base and improving tax-to-GDP ratio, as the number of return filers has declined by more than 23 per cent to 1.31 million till the first week of December as compared to 1.69 million returns in the previous year.
Commenting on the issue, FPCCI President Mian Anjum Nisar noted that the FBR had failed to increase the number of active taxpayers in the last decade, indicating bad governance and weak tax management of the tax department.
According to the data, the FBR received about 23 per cent less income tax returns for the tax year 2020, as returns stood at Rs6.5 billion during the period against Rs12.8 billion of the same period of last year, reflecting a decline of 49pc.
“There is an urgent need to reform and simplify the taxation system in consultation with real stakeholders, besides addressing the issue of double taxation through integration of provincial and federal government laws and harmonisation of FBR and Punjab Revenue Authority (PRA),” he added.
The FPCCI president said that the chamber has already submitted its proposals to meet the challenges being faced by trade and industry due to the outbreak of Covid-19, as its severe and adverse impacts on various aspects of the economy are quite visible.
“We have also asked the FBR to reduce the tax rates to help increase competitive edge of indigenous products in both local and global markets, as high tax rates provide incentives for tax evasion and corruption and results in high cost of doing business.
“The tax agency should conduct a study to find out what has gone wrong that even after penalising non-filers, they are happy to pay more by way of advance tax instead of filing returns.”
The FPCCI president suggested that taxes should be charged one time by any provincial or federal government, as provinces levy same kind of tax which the federal government has already imposed, escalating the cost of production and discouraging the registered manufacturers.
He called for harmonisation of sales and income tax laws, getting rid of conflicting provisions, suggesting enhancing tax base by automation, and improvement in the tax structure so that business and investment could flourish in the country, as the existing tax structure discourages investment.
He also requested the government to focus on reducing tax rates and expanding tax base by bringing all exempted sectors into the tax net.
Mian Anjum said that high tariff of utilities and RD’s on raw material are also the factors discouraging exports, adding that coordination between the government and the private sector was vital for economic growth, therefore the government must develop policies that could provide conducive business environment in the country.
He urged the authorities to introduce new tax incentives and extend the period of existing ones for attracting new foreign direct investments in line with the potential of the country.
Commenting on the menace of corruption, he said that the government needs to develop local software and applications with simplified system in Urdu so that interaction of human resource is reduced.
He also recommended that the current sales tax regime of VAT mode should be reviewed and in case enforcement is not possible it should be overhauled, to eliminate corruption and the negative financial impact on businesses due to delay in refunds and provide level-playing field to the organised sector.
