KARACHI: the Pakistan Business Council (PBC), in its proposals for the budget 2016-17, has asked the government not to increase taxes for implementing its socio-economic agenda.
The PBC, a representative body of 50 largest private-sector businesses, demanded the government to start taxing all kinds of income irrespective of its source from 2016-17, adding, “The taxation base needs to be widened through better documentation by bringing the under-taxed and the currently exempt sectors into the tax net.”
The body said that the frequent changes in the tax laws, such as the super tax, levy on undistributed reserves, alternate corporate tax and the refusal to allow carry-forward losses under the minimum tax regime may help shore up tax collection in the short term, but are counter-productive in the long run.
Such measures will lead to a reduction in the collection by the Federal Board of Revenue (FBR), as corporate entities review their investment plans. The arbitrary and non-transparent implementation of tax laws by the FBR functionaries in their zeal to achieve unrealistic revenue targets is severely hurting viability of the formal sector, the PBC said.
While appreciating some of the government measures, the PBC called for ending tax discrimination against big businesses. “Pakistan’s formal taxpaying sector needs to be supported to allow it to gain scale and become competitive. Tax policy needs to encourage the development of scale as opposed to viewing big business in a negative framework,” the PBC said.
“A large pool of financial data is available with the FBR. The FBR portal is constantly updated with income tax and sales tax withholding data from the formal sector. The FBR should tap into this data to increase the taxpayer base in the country,” the PBC suggested.
It demanded that manufacturers who buy at least 90% of input from registered suppliers should be allowed a 2.5% tax credit in order to promote documentation of the economy.
