Business Community warns against any further increase in taxes
Local business community in a meeting at the Islamabad Chamber of Commerce and Industry (ICCI) cautioned the government on Wednesday to desist from any move to impose further taxes on existing taxpayers in order to improve revenue collection because such measures would bring additional woes to trade and industry which they said would make life of a common man more difficult besides creating harmful consequences for the economy.
ICCI President Atif Ikram Sheikh, Senior Vice President Sheikh Pervez Ahmed and Vice President Sheikh Abdul Waheed said that government was reportedly planning to announce new tax measures to meet the tax targets set for the year 2015-16, however, they stressed that preference should be given to bringing untaxed sectors into the tax net instead of putting more burden on existing taxpayers. They said that if the government was sincere about improving tax revenue collection, it should focus on developing a fair taxation system as the current system was marred with many distortions and was not supportive to the growth of business activities.
They said that heavy reliance on withholding taxes was not the right approach as these taxes were putting a lot of pressure, especially on small enterprises and were hindering development of the SME sector, which was an engine of growth for the economy. They said the prevailing tax system had also forced the industrial sector to pay disproportionately high taxes as compared to agriculture and services sectors while under a fair tax system, all sectors of the economy would have to pay tax according to their share.
They said that FBR was collecting about 60 per cent of its tax revenue from indirect taxes that were regressive in nature as they reduced the disposable income of the common man and affected the growth of business activities as well. They emphasized that the government should focus on direct taxation, which was progressive in nature and would help in improving the overall tax revenue of the country.
They said that the government should immediately end all exemptions given to various sectors of the economy as these exemptions were a major source of tax distortions and big hurdle in expanding the tax base. They identified multiple taxation, lack of adequate incentives to file tax returns and trust deficit between tax collectors and taxpayers as other major factors for low tax-to-GDP ratio in the country. They called upon the government to address these issues on priority to improve tax revenue collection and put the economy on the path of sustainable economic growth.