The business community has urged the Federal Board of Revenue (FBR) to bring down the rate of sales tax to single digit as existing rate of GST was very high. The Multan Chamber of Commerce and Industry (MCCI) in its budget proposals sent to the chairman FBR Nisar Muhammad Khan termed the current rate of sales tax @ 17 per cent with an additional 3 per cent value addition tax on commercial importers as lofty, saying that there was a narrow tax base due to the high rate which induced tax evasion under invoicing, corruption and smuggling.
Keeping the said issue in view, the MCCI has proposed that sales tax rate should be brought down to a single digit. It said that the rate of sales tax to be brought down to 10 per cent and 3 per cent value addition tax may only be levied on luxury goods which are expected to be sold at a higher value addition the local market as compared to other goods.
Moreover, the MCCI said that higher value addition tax, ie, 5 percent to 7 percent should be levied on import of luxurious items such as cosmetics, chocolates, biscuits, confectionaries, jams, toothpaste, shampoos, juices, drinks, etc. It further said that the proposed amendments would assist in the expansion of tax base, reduction in smuggling and corruption, rise in government revenues and may increase competitive edge and promotion of documentation of economy.
Furthermore, the reduced tax rate will encourage the unregistered persons to get themselves registered, resulting in broadening of tax base. While, higher value addition tax on luxury goods will not only generate additional revenue but will also support the local industry.
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