FPCCI budget 2007-08 proposals: 100 percent write-off on mining expenditure proposed

The Central Board of Revenue (CBR) should amend the income tax rules to allow 100 percent write-off on expenditure made by the mining firms on construction work of buildings, houses and roads at the mine sites.
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in its 2007-08 budget proposals has suggested that income tax rules should be amended to attract companies to coal mining sector.
According to FPCCI, coal mines are located in wilderness and far away from towns. Buildings at mine sites are valuable as long as mining operation continues and the mines are productive. While in towns buildings value appreciates with time but the buildings at mine sites have little resale value. Therefore, it is suggested that the government should allow 100 percent write-off. Agriculture is the largest sector of the national economy, with a share of a quarter of the GDP. Farm income tax has failed to contribute to the annual nominal tax targets of Rs 10 billion set for the last fiscal year. It is therefore suggested that agriculture income should be brought into tax net.
Rate of income tax withheld for cutlery and utensils industry is currently at 0.75 percent that may be reduced to 0.5 percent.
It is suggested that presumptive tax regime (PTR) should be abolished because there are several anomalies identified in this regime. The withholding tax on leather garments at the rate of 1 percent may be reduced to 0.5 percent for two years. The Export Development Surcharge may also be waived for two years.
Under the repealed Income Tax Ordinance 1979, salary class enjoyed allowances to be offset against their personal tax liability. It is suggested that burden of salaried class should be mitigated by offering them allowances (eg child education allowance, family allowance etc) to be offset against their salary incomes. There is mushroom growth of private schools, colleges and institutions and it is observed that they are not contributing their share of tax according to their earnings. It is suggested that the income tax department should have a proper survey.
Most of the elected representatives and public servants have been multiplying their wealth and assets disproportionately against their sources of income. Efforts should be made to detect such cases that are engaged in clandestine transactions. If this is done earnestly, it would add to the revenue, substantially.