ISLAMABAD: Federal Board of Revenue (FBR) is likely to hike multiple taxes in next budget to meet the government’s 25 per cent increased development budget for fiscal year 2017-18.
The FBR has proposed 100 per cent increase in turnover tax which would affect Small and Medium Enterprises (SMEs).
According to the officials, unlike profit taxes, turnover taxes cannot be evaded by over-reporting costs and in high-evasion environments, turnover taxes may generate higher tax revenues than profit taxes. But at the same time, analysts believe that increasing cost of doing business to the already losses making enterprises makes no sense. It will destroy the small business.
Sources said that the FBR has also proposed to increase the Capital Value Tax (CVT) on real-estate claiming that introduction of taxes on properties has proved fruitful in the outgoing financial year. However, the measure, though could be better for generating revenue, is being taken without ensuring that the overall impact of the higher tax will not affect the low-income people, who would be barred from purchasing land due to high cost.
The Board further suggested to increase withholding tax on non-filers and increasing their cost of doing business. The government had introduced a scheme of differential taxation under which the non-filers of returns are subjected to a higher rate of withholding taxes on various economic transactions.
