Multan Chamber of Commerce & Industry (MCCI) on Monday said withholding tax (WHT) on banking transactions should be abolished or reduced in the upcoming budget as recommended by the State Bank of Pakistan. MCCI President Khawaja Jalaluddin Roomi said the government had imposed additional taxes worth over trillion of rupees since it came to power but WHT on bank transactions had attracted more opposition than any other tax.
He said the business community had not accepted that tax and invented different way to avoid it that included trade in dollars, Parchi system, cash transactions and parallel currency. He said authorities should consider abolishing the WHT on bank transactions or reduce it to acceptable limits as continuity of that tax was against the national interests.
Roomi said it was responsibility of the government to make successful the existing policy of improved revenue generation. All the policies to increase revenue had backfired due to overdependence on the tax bureaucracy which was not aware of the ground realities, he said.
He said determination of Finance Minister Ishaq Dar on the issue of WHT was laudable but some reservations of wholesalers and retailers must be taken into account. Moreover, banks were facing severe liquidity crunch after imposition of WHT which called for some steps, he demanded. He said authorities had always preferred indirect taxation while avoiding income tax which was not in the national interest. The government should consider reversing the WHT on bank transactions otherwise situation will not improve, he warned.
The government should prefer imposing direct taxes and improve export and investment situation at any cost as the country cannot survive on foreign loans forever, he added.
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