The Pakistan Business Council (PBC) and Overseas Investors’ Chamber of Commerce and Industry (OICCI), the country’s two premier business organisations, have asked the government to have pragmatic approach towards the tax culture at this critical juncture of country’s history.
“It is PBC’s understanding that the incoming government is formulating critical policies relating to revenue. PBC is most concerned that contrary to tax equity, the incoming government is possibly considering, substantial increase in turnover, withholding, GST and Income Tax along with introduction of Asset tax.”
“The PBC is the biggest supporter of documentation of economy and increasing the tax base. However, the new elected government should concentrate on long term measures to document the economy and increase the number of tax payers instead of pressurizing the entities which are already paying heavy taxes,” Kamran Mirza, PBC CEO, said.
He said when WHT was proposed earlier it was taken as a temporary measure which will eventually abolish with improvement of tax regulations and collection by FBR but it is sad to see such proposals instead of long term concrete measures. This proposed five percent WHT, he mentioned, would further hurt the manufacturing industry which was already suffering due to economic conditions of the country and this will not only increase borrowing from banks but will also adversely affect the liquidity and cash flows adding to the miseries of the manufacturing industry.
PBC warned that now taxpayers are more serious and wary of the fact that tax system in Pakistan is skewed against them. So any measure to further burden them would not be welcomed.
The OICCI said that it believed that the ongoing democratic process was creating a positive international perception which was partially reflected in increasing level of FPI in the stock market. “This window of opportunity can be used to channel the longer term FDI to bolster the manufacturing and infrastructure sector for sustained business activities which will help increase employment and economic growth,” the statement said. “OICCI has regularly put forward specific proposals to help achieve an environment that is conducive to economic growth that include increasing tax base, changes in public sector and measures to improve policy implementation in various sectors which the chamber is hopeful that the government would like to consider.” The members of both OICCI and PBC, local automobile manufacturers have also strongly protested against the recently proposed 5 percent withholding tax on the purchase of new motor cars as this will increase burden on the industry that is already paying 33% of vehicle RSP as duty/taxes.
