The Islamabad Chamber of Commerce and Industry (ICCI) has recommended to the government to bring down the Sales Tax by 2.5 percent annually and broaden the tax base to balance the budget.
The ICCI President Abdul Rauf, who chaired a meeting to prepare recommendations for the next year's budget here on Tuesday, said the government should announce a special relief package for setting up new industries.
He said the CBR had negative growth in the domestic sales tax during the first nine months of the current fiscal year, which it collected from 10 major areas and the sugar and cigarettes witnessed minimal increase of 1.2 per cent and 2.2 per cent respectively.
The ICCI president recommended that Tax Department should put in place appropriate measures for an effective sales tax collection system and rationalise the tax slabs. "Large tax paying units and medium tax paying units should be promoted to generate more revenue," he added.
He said a number of taxes on various pretexts are imposed on the industrial sector with 18 per cent contribution to the country's GDP while quite contrary to that, the agriculture sector contributing 25 per cent to the GDP was enjoying subsidies and exemptions of many taxes.
He recommended that government should broaden the tax base on emergency basis to eliminate the practice of imposing extra levies on the present tax payers and called for reduction in the discretionary powers of tax officers, as the same milking cow was being sucked again and again. Talking about the country's corporate tax ratio, which is now 40 per cent, he said cut in the corporate tax would help flourish the industrial sector that guaranteed economic development and prosperity in the country.
Rauf said since Pakistan was member of the World Trade Organisation, which had eliminated quota system, the government should rationalise the whole tax system to enable Pakistani products to compete in the international markets.
He said, "We are facing competition with India and China as their products are cheap due to low input and production costs; therefore, the government should provide relief to the industrialists and business community of the country."
He said in order to end unemployment and alleviate poverty, the government should also announce special packages in the forthcoming budget for those who established new industries and provided jobs to the unemployed youth.