PBC demands filing of tax returns be made mandatory

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The advocacy forum of country’s top 38 business groups, Pakistan Business Council (PBC) has called for taxing all incomes and has proposed that filing of tax returns should be made mandatory for persons having a credit card, personal loan, member of private club or a professional body, have traveled abroad in the last financial year and owns a urban property of more than 240 square yards. This demand is made in PBC budget proposals sent to the government for consideration for the federal budget of fiscal year 2012-13. It stresses revitalizing of manufacturing sector not through rebates, refunds or write offs but through enabling environment for consolidation, investment and competitiveness.
PBC stresses that all incomes irrespective of the source must be taxed as currently agriculturists, real estate developers and builders are exempt from income tax. It will enable fairer distribution of tax burden. It proposes that the real estate developers should be taxed on per square foot basis for built up property and on per square yard basis on land developed for sale. This will enable the government to rapidly enhance the low taxpayers’ base of 1 million in a population of 170 million.
It finds that it could be accomplished easily as all the information is readily available and will lead to greater documentation of economy and more revenue collection. It recommends across the board implementation of value added tax and where documentation is currently not possible in the wholesale and retail chain, the model of zero rated export sectors should be followed.
Pakistan needs to take a more proactive approach in ensuring that the provisions for monitoring of misuse of Afghanistan Pakistan Transit Trade Agreement including provision of bank guarantees equivalent to levies are collected from Afghan imports. This will reduce pressure on domestic manufacturers and increase revenues. It also demands strengthening of National Tariff Commission to counter massive under invoicing and dumping of imported products. It recommends reducing rate of corporate income tax 42 per cent, which is highest in the region and needs to be rationalized to attract foreign direct investment, by reducing it on two per cent per annum to bring it at 25 per cent level in five years time. The tax rate of 25 per cent on non-corporate sector is becoming a big incentive for converting limited companies into partnerships and proprietorships.