In order to enhance the tax base, there should be free flow of information to gather accurate data about potential taxpayers, Large Taxpayers Unit (LTU) director-general Shahid Jamal said on Tuesday. Speaking at a pre-budget seminar organised by the Institute of Chartered Accounts of Pakistan (ICAP), he said the Central Board of Revenue (CBR) has to face various hurdles in gathering data from different organisations and banks, as they hide the require information on the pretext of being secret, which could not be shared with the CBR.
"When we are talking about to reduce tax burden on over-taxed sectors by enlarging the tax base, these hurdles should be overcome which, otherwise, would nullified all efforts, the CBR is taking steps to bring more and more people into tax net, he said.
He, responding to different queries raised by participants, was of the view that there is also a need for a change in attitude, as mere administrative measures would not help in resolving these issues.
On sales tax refund issue, he informed that this is being tackled to facilitate taxpayers and said in LTU, it would come to an end by next year.
However, he regretted that there are reports of misuse of this facility, which is eroding the real spirit behind this facility.
The CBR has taken up two projects regarding sales tax in textile sector: non-taxed purchases so that no refund issue would emerge and invoice matching should be done to check any wrongdoing in it.
About tax on salaried class, Shahid Jamal said the CBR is thinking on the lines that exemption should be fixed on income percentage.
He said the CBR has to take a dip for the time being for reforms currently underway to facilitate taxpayers, but it would benefit in the long run both the tax collectors and taxpayers.
Athar Saeed Advocate, Supreme Court of Pakistan, in his presentation outlined some basic points, which should be kept in mind before finalising the Finance Act 2005.
He recommended that taxes should be gradually reduced to bearable limits and should not be drastically increased from year to year. The government's tax policy should be effective for a long period of time and should not be amended during this period.
Basic and civil amenities, he proposed, should be provided to citizens and taxpayers should be kept informed of projects where the tax paid by them is being utilised and taxpayers should be paid proper respect and recognition.
Besides, no taxes should be levied and no liability created having retrospective effect and no benefits and incentives should be withdrawn, retrospectively.
S.M. Shabbar Zaidi in his presentation put forward various proposals for expansion in tax base like automation at customs stage, gradual reduction of VAT rate, dissemination of VAT, customs and income database, special reduced of tax for SMEs, abolition of inter-corporate dividends.
In addition, gradual phasing out of presumptive tax regime, reduction on withholding tax, expansion of zero-based sales tax regime to export-oriented industries specially textile sector, abolition of exemption from unexplained foreign exchange, brining speculative gains in immovable property, stocks and shares to tax, introduction of non-cash business transactions, etc.