The business community on Wednesday expressed dismay over news reports that the Federal Board of Revenue (FBR) had suggested new taxations measures in draft of the Tax Laws (Amendment) Ordinance of 2013, which is part of the new budget. Rejecting the new taxation measures, they said that they feared that the Ordinance contained additional taxation measures of Rs 200 billion, which would greatly add to the burden borne by the masses, besides substantially increasing the cost of doing business.
Criticising the FBR, they said that the board was used to impose taxes on the business community and the general public without taking into consideration the capacity of the masses to pay or how the taxes would impact on the prices of local and imported goods.
They said that new tax measures would create a hike in the prices of all commodities, including food items. They said that that the business community had been expecting that the upcoming government of Nawaz Sharif would announced some steps to help spur economic actives. The new taxation measures, they said, would aggravate the prevailing economic conditions. The business community wondered about the FBR's rationale in this regard and said that it seemed that the board was completely oblivious to the impact of these measures on the already fragile economic conditions.
Stressing the need for quickly taking up the taxation issue by the new finance minister, businessmen urged Nawaz Shatrif and his team to focus on fiscal growth, maintaining law and order, imposition of equitable taxation on all sectors, revamping the energy sector, besides bringing long-term political and economic stability.
Chairman of Korangi Association of Trade and Industry (KATI) Mohammad Zubair Chhaya expressed the hope that the new government would not include all taxation measures suggested by the FBR in the new budget. He also said that the new government should consult all stakeholders and brings positive changes to steer the country out of the economic crisis.
Former chairman of North Karachi Association of Trade and Industry (NKATI) Abdul Rasheed Fodderwala said that the new taxation measures "will have a negative impact on trade and industry", adding that the business and industry were in no position to sustain an increase in taxation.
Former Vice-Chairman of Korangi Association of Trade and Industry (KATI) Shahid Jaweed Qureshi urged the new government that it should not allow an increase in the sales tax rate, as it would result in a hike in the prices of all commodities. He said that the business community would have no other option but to pass on the impact of the increase in taxes on consumer, but they were already overburdened. He maintained that any increase in taxes encouraged tax evasion. "Instead of increasing sales tax, the government must reduce it. This will discourage tax evasion," he said.
He said government should tap new areas for taxes such as income on property, besides taxing the agricultural sector, instead of "burdening those who are already in the tax net". He said that the proposed tax measures would destroy the national economy, adding that it would also give a huge boost to black economy, smuggling, besides resulting in a decline in exports.
Meanwhile, Karachi Chamber of Commerce and Industry (KCCI) also expressed "deep concern" over news reports about further taxes. "The incompetence and lack of will on the part of FBR to broaden the tax base is reflected in the drastic increase in GST and WHT on existing taxpayers and is a short-cut to achieve revenue targets. The measures are bound to fail and will result in widespread protests by the trade and industry.
"Against the proposals of apex bodies all over Pakistan which have demanded reduction of GST to 8-9 percent, the FBR has proposed an increase in Standard Rate of Sales Tax upto 17 percent. This measure will result in tax evasion and discourage new potential tax payers. Tax collection will not increase as a result of increase in GST rate.
"Karachi Chamber is of the view that the FBR has no will and intention to broaden the tax base and instead of bringing those untaxed individuals with massive wealth and substantial income into the tax net, the FBR is using the conventional tactics of squeezing the honest tax payers who are already in the net. "The trade and industry...rejects the proposed measures and will not accept further taxes and draconian measures which are going to harm the business climate and will have a negative impact on overall economy. KCCI also believes that such measures should be implemented after the consultation with leading chambers of commerce and industry.
"KCCI terms this as a conspiracy against the incoming government. KCCI totally rejects these measures and hopes to have interactive session with the new Finance Minister and his team for pragmatic steps for widening tax net to collect required revenue for the progress of our beloved nation."