Take back WHT or banks will be empty!

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  • Businessmen, individuals in Karachi, Rawalpindi, Multan, Gujranwala, Lahore join hands against 0.6pc WHT on banking transactions
  • FPCCI, ICCI chiefs propose FBR should provide list of non-filers to banks so that they be charged instead of everyone including tax filers and the poor
  • Demand govt withdraw tax as it will affect business including export and also result in inflation as traders will burden consumers by increasing prices

The country’s traders rose up against the levy of 0.6 per cent withholding tax (WHT) on every banking transaction, warning the government that they would withdraw all their savings from banks in case the tax was not taken back.

Traders in Karachi, Rawalpindi, Multan, Gujranwala, Lahore and several other cities joined hands against the tax and held strikes and demonstrations in their respective areas.

All the markets remained closed in Lahore and Faisalabad while the traders union in Karachi also held a demonstration outside Karachi Press Club. In the meanwhile, traders in Sargodha have called for strike on July 8 (today) against the government’s decision.

FPCCI AGAINST WHT:

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Mian Muhammad Adrees on Tuesday drew the attention of the Prime Minister Mian Nawaz Sharif and Finance Minister Senator Ishaq Dar towards the agitations of business community all over Pakistan against the tax.

In a statement, Adrees said that it was surprising that the banking sector has not yet been provided the list of non-filers to whom they have to charge the 0.6 percent tax. He also said that Federal Board of Revenue (FBR)’s data in this regards is also not updated.

The FPCCI president said the banking sector is deducting 0.6 percent WHT from all customers. “The bank officials just look at the transacting amount and if they find it above Rs 50,000 they simply deduct 0.6 percent WHT, irrespective of whether the customer is tax-filer or non-filer,” he said, adding that FBR should have made arrangements with the banks and share with them the updated data of filers and non-filers prior to the impose such tax.

“Such type of taxes are not advisable for low income economies like our country where the per capita income is around $1300 which ultimately if converted in Pak Rupee will reveal that it is even lower than the minimum salary scale of the government which is Rs 12,000 per month,” said Adrees.

He pointed out that the volume of banking transaction of over about Rs 6 trillion annually should not be linked to all non-filers which also include the transactions of tax-filers, widows, pensioners, lower cadre employees and other poorest people of the society.

In this scenario, the banking deposits will also be reduced as the people will keep their deposits either in hard cash or in the shape of gold to avoid tax, he said. He regretted that the tax payers all over the world were honoured but in Pakistan the tax payers were being victimised.

He emphasised the need of broadening the tax net which is the ultimate solution for enhancing tax revenue to the exchequer rather than the FBR putting pressure on the existing tax payers. He urged the prime minister and finance minister to withdraw the tax on banking transactions because it would hamper the business activities which will consequently reduce the country’s exports.

ICCI WON’T HAVE THE TAX EITHER:

Moreover, Islamabad Chamber of Commerce and Industry (ICCI) has called upon the government to immediately withdraw 0.6 percent advance tax on banking transactions of Rs 50,000 and above for non-filers as it has created a lot of problems for businessmen and would badly affect the business activities in the country.

In a statement, ICCI President Muzzamil Hussain Sabri said that the government should have taken business leaders of the country on board before the imposition of this new tax as it has created disturbance in the business community of the whole country.

He said the government should also withdraw enhancement of sales tax from 2 percent to 3 percent on registered exporters and 5 percent on non-registered exporters and grant zero-rated facility to exported-oriented products.

He said FBR’s Intelligence Department has started raids on shops which has created harassment in the business community and stressed that this practice should be stopped forthwith.

Sabri said all tax laws that are proving hindrance in the smooth growth of business activities including Sec-40B and 38A should also be revised in consultation with stakeholders as these laws have added to the woes of traders and industrialists.

He was of the view that government’s increased reliance on withholding taxes could become counterproductive as it would further incentivise non-filers to conduct cash transactions and promote informal economy in the country. He said the imposition of this tax would also give rise to inflation as non-filers would pass on its burden to the common man who will have to pay high prices on purchases.

The ICCI president said the whole business community of the country has rejected this new tax and government should pay attention to their demand for its urgent withdrawal.

5 COMMENTS

  1. Tax evaders, actually thieves, are very strong. This lobby will never allow increase in tax base or correction of our tax to GDP ratio. In my opinion this tax should be between 1% to 2%. 0.6% is very little. It must be emphasized that it is an advance tax which is adjustable at the time of actual assessment of tax liability. Just imagine that FPCCI want FBR to provide list of non-filers to banks. This is ridiculous. How would FBR know the list of non-filer account holders? In this case, it will have to be made mandatory for banks to provide information of all accounts to FBR. The present system is very simple. All filers should provide copy of NTN certificate & Return copies to banks and their accounts can be treated as those of filers.

  2. Please allow me to add a little on my above comments. I may clarify that I am a small businessman and an income tax payer since last forty years. As a filer, 0.3% is being deducted from my accounts on all cash withdrawals over Rs.50,000. At the end of the year, bank issues me a certificate confirming my total deduction during the year. I get full credit from FBR automatically. There is no problem. The basic problem is the way we bring up our children. If we inculcate honesty and truthfulness in them, they will become honorable citizens of the society acting nobly and discharging their tax liabilities. Otherwise, they will always be finding loopholes to evade taxes and not to discharge their obligations to the society they live in and benefit from. All those protesting against 0.6% deduction seem to have been people who were not fortunate enough to get a decent environment from the day they were born and certainly their parents and guardians did not do a good job.

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