PIAF for reforming tax system in consultation with real stakeholders

LAHORE: The Pakistan Industrial and Traders Association Front (PIAF) stressed the need for reforming and simplifying the taxation system in consultation with the real stakeholders.

The PIAF Chairman Mian Nauman Kabir in a statement on Wednesday said that the FBR’s reforms initiatives are not bearing fruit, as the revenue collecting agency could increase the number of sales tax return filers by just 8 percent in first six months of the current fiscal year, mainly due to rise in the type of those filers, who haven’t paid any tax, implying that bad governance and weak tax management of the tax department still persist. It is unfortunate that just 30 percent of the total sales tax return filers are paying taxes while 70 percent of the filers have paid nil tax, he said.

He said that the government’s new measures seem to be inadequate to convince people to file tax returns due to arm-twisting by the FBR, creating unnecessary controversy due to continuous raids on business premises.

He asked the government to enhance liaison with the business community with a view to broaden tax base and enhancing tax-to-GDP ratio, as the number of active taxpayers has declined by 30 percent to just below 2.2 million. He urged the authorities to introduce new tax incentives and extend the period of existing ones for attracting new foreign direct investments in line with the potential of the country. With a view to wipe out corruption there needs to develop local software and Apps with simplified system in Urdu so that interaction of human resource should be reduced, he suggested.

PIAF Vice Chairman Javed Siddiqi said that the sustainable solution to Pakistan’s problems lies in the structural reforms, as we can see very large inefficiencies in tax collection, which needs to be removed. So, the tax compliance must be improved and tax base should be broadened, which cannot be achieved with a single policy change, but by a systemic approach.

He suggested that taxes should be charged one time by any provincial or federal government, as provinces levy same kind of tax which the federal government has already imposed, escalating the cost of production and discouraging the registered manufacturers.

He called for harmonization of Sales Tax and Income Tax laws, getting rid of conflicting provisions, suggesting enhancing tax base by automation. He urged the government to improve tax structure so that business and investment could flourish in the country, as the existing tax structure discourages investment. He requested the government to focus on reducing tax rates and expanding tax base by bringing all exempted sectors into the tax net.

He said that coordination between the government and the private sector was vital for economic growth, proposing the government to develop policies that could provide environment conducive to business in the country. He called for strict measures to stop illegal trade, as the smuggling is not only causing massive shortfall in revenue collection but also discouraging the legal businesses and documented economy. Majority of the people don’t want to get them registered and preferred purchasing of smuggled goods mainly due to high duties on legal import, he added.

Copyright Business Recorder, 2021