Joint budget proposals from all chambers of Pakistan: creating Rs 50 billion fund for timely payment of refunds to exporters suggested

All chambers of commerce and industries and trade associations of the country in their joint budget proposals for the year 2014-15, have unanimously suggested that a special fund of Rs 50 billion should be created in the upcoming budget to provide timely refunds to the exporters.
They also recommended that the rates of General Sales Tax (GST) and Income Tax be brought down to a maximum of 12.5 percent (inclusive of Value Addition Tax) and 30 percent for corporate and 20 percent for small companies having turnover of Rs 1.0 billion.
Presidents of various regional chambers of the country including Karachi Chamber of Commerce and Industry (KCCI), who have jointly prepared the comprehensive budget proposals for the year 2014-15, have released the proposals after Federal Finance Ishaq Dar did not give time to the chambers' presidents to hold meeting and discuss the proposals.
All Chambers' Budget proposals have been sent to the policymakers with a hope that a pro-business budget will be announced as per the aspirations of the entire business community of the country. The proposals have been sent to Prime Minister, Finance Minister, Commerce Minister and other government organisations for consideration and inclusion in the budget 2014-15.
The chambers approached Ishaq Dar several times for time to hold meeting with him in order to provide business community an opportunity to effectively highlight the budget recommendations but unfortunately received no positive response. Earlier, it was decided that a third meeting of all chambers of the country will be held in Islamabad and Ishaq Dar will be invited to deliberate on the joint budget proposals.
The Karachi Chamber organized 1st All Pakistan Chambers' Pre-Budget Conference on February 4, 2014 which was followed by 2nd All Chambers Pre-Budget Seminar by Faisalabad Chamber on April 20, 2014. Dar was invited to both the conferences but he did not turn up due to this other engagements.
In their budget proposal for the year 2014-15, the chambers of commerce and industry and trade associations of the country have unanimously suggested that a special fund of Rs 50 billion should be created in the upcoming budget to provide timely refunds to the exporters, who are earning precious foreign exchange for the country. Rates of General Sales Tax (GST) and Income Tax be brought down to a maximum of 12.5 percent (inclusive of Value Addition Tax) and 30 percent for corporate and 20 percent for small companies having turnover of Rs 1.0 billion, respectively.
This will provide relief to trade and industry and it sales tax should gradually be brought down to single digit while the corporate income tax 25 percent. Since 65 percent of the sales tax and revenue is collected at import stage, it has become a fixed tax and levy instead of value-addition tax, increasing the incidence of under invoicing and smuggling by some unscrupulous elements. As total incidence of customs duty, sales tax, income tax, Federal Excise Duty (FED) and regulatory duty could sometime go as high as 70-80 percent of the value of import in certain cases.
Customs duty slabs should be simplified with four slabs of zero percent, five percent, 10 percent and maximum 15 percent. Agriculture income is a convenient means to conceal income generated from all other sources, for the documentation and taxation, income from every segment including agriculture should be taxed, NTN must be mandatory for all sectors and they must be asked to file income tax returns.
No amount of effort will generate or improve the tax revenue collection, until and unless all incomes above the minimum threshold of Rs 400,000 are taxed, irrespective of the source. Currently huge incomes from agriculture, professional services and influential remain untaxed. Firm steps are needed to recover the tax from all these areas, the suggestions said.
According to proposals, taxpayers expect from Federal Board of Revenue (FBR), a level of service that they receive from the very best of the private sector and multinational service industry. The taxpayer service delivery function nowadays plays a crucial role in the administration of the tax legislation in all countries.
Prevailing services that are user-friendly, in the sense of being accessible and understandable for all, help to maintain and strengthen the taxpayers' willingness to comply voluntarily and thereby contribute to improvement in overall levels of compliance with the laws.
S.R.O providing unnecessary benefits to specific sectors by pressure of vested interests and influential groups, individuals, businesses or sectors should be withdrawn immediately. However, S.R.O granting exemptions to basic needs, humanitarian and public welfare should be retained with effective monitoring mechanism.
Government should support development of self-sustained industrial zones run by private entrepreneurs, and also allow already existing Export Processing Zones to export 40 percent of their production to Pakistan Tariff Area, after paying all duties and taxes, against US dollar. Law of Income support levy is discriminatory in nature as it is based on the principal of double taxation and therefore it must be withdrawn in the new budget 2014-15.
Effective zero rating for all export sectors be implemented, so that cash flow are not stuck up in refunds. It is suggested that the government should create EXIM Bank with an initial capital of Rs 20 Billion for the development and financing of export and for leasing of capital goods at low interest rates to export industries with the consultation of stakeholders to double the export in 5 years' time.
Commercial importers are paying high value-addition tax at import stage @ 3 percent, therefore a fair and equitable tax structure and policy be adopted to provide a level playing field. They are also source of raw materials supply to 80,000 SMEs. Therefore, it is recommended that Rule 58E of The Sales Tax Special Procedure Rules 2007 should be reinstated to provide immunity of Audit to commercial importers since advance value-addition tax is already been paid by them.
All Customs data as shipment value/ ATT for all ports must be available online to curb under invoicing. If Commissioner Appeals has not passed an order within prescribed time period, automatic stay of demand is considered to be granted. All ports (including dry ports) should remain open on Saturdays as well as the relevant FBR offices and Banks responsible for collection of duties and taxes.
The budget proposals have been compiled by President KCCI Abdullah Zaki, Senior Vice President Muffasar A. Malik, Vice President, Muhammad Idrees, Chairman Budget Committee, Qamar Usman and Chairman Taxation Sub Committee KCCI, Hassan Sheikh Vohra.