Lower GST to increase revenue, FPCCI tells Finance Ministry

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Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged the government to reduce General Sales Tax (GST) to single digits and also cut corporate tax to make the upcoming budget business-friendly. FPCCI Vice President Riaz Khattak said that the Federal Finance Ministry should reduce the percentage of sales tax by 7 per cent in the upcoming budget in order to increase the government revenues; as a small number of the population pays this tax. “If we compare our neighbouring countries, our sales tax rates are comparatively higher, even more than Afghanistan. The more the government facilitate in taxes the more revenue it generates; a simple theory. I don’t know why the ministry failed to understand this,” he added. Riaz Khattak suggested that the government should also focus on direct taxation and introduce a flat rate of tax for as many sectors as possible to improve relationships between taxpayers and tax collectors and enhance collections. Pakistan had 1.6 million taxpayers in 2006, which has now been reduced to around one million which indicates lack of trust between taxpayers and collectors that can be restored by making efforts, he said. He also said that low tax collection has impaired the state’s ability to spend on the social sector and ensure equal distribution of wealth and it has become difficult for the government to raise revenue for its own expenditures.