The Faisalabad Chamber of Commerce and Industry (FCCI) has emphasised the need for further broadening tax base in the best interest of the country and urged the government to reduce rate & number of taxes with simplification of procedures.
Talking to newsmen, FCCI President Mian Muhammad Hanif said that there were as many as 12 provincial agencies and 14 federal government taxes that keep the traders busy throughout the year.
Undoubtedly, on one hand WTO offers a good opportunity to expand and grow, while on the other it poses serious threats and challenges to the Pakistani products.
These taxes and cumbersome procedures are inflating the cost of country's exportable items, making it uncompetitive in international market and hitting the domestic production, he added.
In federal budget 2005-2006, he said that the withholding tax at the rate of 0.1 percent had been imposed on the withdrawal of an amount of more than Rs 25,000 from the bank at a time. This imposition should be withdrawn on the ground that there is a fearful environment on doing business through bank cheques, particularly those small businessmen, who avoid from documentation, are depressed of explicit business record available to the CBR.
It has been observed that these small traders are not doing business through banking channels, hence NTN holders should be exempted from this tax.
The FCCI president said that the provisions had created hardship for commission agents. The margin of gross profit was lesser than the rate of withholding tax and the said withholding tax had been treated to be a final tax. This is not only unfair but also impracticable.
He further suggested that sub-clause (d) should be inserted after sub-clause (c) in sub-section (1) of section 153 of the Income Tax Ordinance, 2001 in the following words: (d) for the sale of goods on commission basis. Time period of income tax audit should be reduced from 5 to 3 years.
He said that the rates of customs duty were irrational and not cascading in the soap industry. No proper cushion is provided between finished imported soap and raw materials Custom duty must be cascading.
Mian Hanif demanded that these SROs should be withdrawn with immediate effect. Moreover, the soap raw materials are not covered under the SRO, the additional burden of the duty charged by the Federal Excise Authority should be withdrawn immediately.
In case of other raw materials, the custom duties leave either no cushion or little cushion against finished soap, which is highly illegal and unjustified as well as WTO clauses of protecting the local industries.
Two years ago the duties of Palm Stearin for toilet soap was reduced to 10 percent while for Oleo Chemical Industry the duty of Palm Stearin is 5 percent, but nothing was done for laundry soap industry.
Apprehension of health hazards by oleo chemical unit is based on misstatement of facts and realities. Customs duty on import of machinery is at present 5 percent.
Our industries suffered heavily due to this syndrome, especially influx of Chinese goods, which created a huge disadvantage for these industries.
He proposed that the government should formulate a strategy to join hands in enhancing documented bilateral trade with China or whose trade involved in smuggling, under invoicing.
Government should strengthen these steps through laws under safeguard measures, which might make imports cumbersome and costly. Obviously, documented trade will increase Custom duty on import of samples, he mentioned. FCCI Chief demanded that the Custom duty on import of samples should be zero-rated.
He proposed that the applicant be allowed to apply directly to the concerned ADR Committee to evaluate the case and forward to CBR chairman. It is worth mentioning that the concerned collectors/ commissioners along with representatives of different chambers of commerce and associations are members of the ADR Committee.
He proposed that number of secretaries dealing with ADR be increased on priority basis to deal the cases without wastage of time.
Mian Hanif said that the standard rate of GST at 15 percent is too high. Lower rate of sales tax will go a long way in increasing the demand. He proposed that the standard rate of sales tax should be fixed at 5 percent to 7 percent.
Sales tax refund system is very complicated, lengthy in procedure and causes, un-necessary delay. Also causing liquidity problems for the exporters who have to borrow funds from financial institution at higher cost. The production cost, therefore, increases which is likely to render our products uncompetitive in international market on one hand and also restrict the export volume depriving the country of much needed foreign exchange on the other hand. Computerisation of sales tax record was introduced to accelerate the refund payment but it is causing further unnecessary delay and aggravating this problem. Refund of sales tax system should be made simple and easy, he demanded.
FCCI president demanded that the carry forward/adjustment of Sales Tax refund should be allowed for the next tax period. Credit should be allowed in the audit with or without mentioning of sales tax number.
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