KCCI aims at reversing economic downturn
April 13, 2012
The Karachi Chamber of Commerce and Industry (KCCI) aims at reversing economic downside and stimulate growth through a package of relief and incentives for the private sector.
Looking at the budget deficits in the last few years, KCCI recommended for the national budget for the year 2012-13 that innovative approach was badly needed and private sector is the only hope for salvaging the country from total economic collapse.
MianAbrar, President Karachi Chamber of Commerce and Industry said that it is imperative to inject a new spirit of dynamism in entrepreneurs to expand existing businesses as well as to undertake new ventures. For that the cost of borrowing from banks has to come down significantly.
He said that with the present state of affairs in institutions such as Pakistan International Airlines (PIA), Pakistan Railways and Pakistan Steel Mills, which are burdened with surplus staff numbering thousands, only the private sector has the capacity to create new jobs.
The government should take difficult and unpopular decisions to offload these three institutions to the private sector or foreign investors in order to save billions of rupees lost through these unviable and loss-making ventures.
Therefore in its budget proposals KCCI recommended FBR to amend various tax rates and provide relief to taxpayer to broaden tax net, he added.
KCCI in its budget proposals for 2012-13 said FBR should not expect taxpayers to show perfection in understanding and following the system. Sales Tax Act 1990 and Income Tax Ordinance 2005 should be comprehensively amended to repeal the draconian laws governing tax policy and curtail unbridled discretionary powers to officers of Inland Revenue.
Untaxed sectors should be brought into the tax net. Exemptions under various pretexts and schemes should be withdrawn. Multiple Tariff rates under the same H S Code should be abolished and single rate of tariff be applicable for all sectors.
Rates of General Sales Tax (GST) and income tax should be brought down to a maximum of 9 percent and 25 percent respectively to provide relief to trade and industry.
Persons registered in the GST regime should not be subjected to other innovative forms of taxes such as Turnover Tax, Additional Tax or Federal Excise Duty.
FED should also be rationalised and brought down to prevent smuggling, imports under the guise of ATT and undue benefits taken through a discriminatory tax regime.
Customs duty and taxes on capital goods such as machinery and basic raw materials be brought to zero rate. Presumptive tax regime and minimum value addition concept should be eliminated gradually in order to document the economy.
To increase the number of registered taxpayers, national tax number should be mandatory for all sectors where income is generated and any economic or business activity is conducted.
Colossal amounts of money are spent on weddings in the country. If documented, wedding industry will turn out to be the single largest industry. Various businesses (B2B services and supplies) are associated with this untapped sector. The industry has a potential to not only generate substantial amount of GST and Income Tax but also bring a large number of new taxpayers into the net.
The exports DTRE via land routes be taken out of the scope of DTRE. A more effective and verifiable mode of incentives may be devised for such exports whereby no refund is involved.
Online filing system should be revamped and streamlined. A registered person who takes the input from the invoice issued by a supplier to adjust against his output tax after due verification from FBR portal should not be held responsible if it is subsequently discovered that the input was not deposited or a tax fraud was committed by his supplier.
All cargo imported under ATT regime should be destuffed at Karachi Port in designated areas for examination and evaluation as to whether the cargo is really meant to be used in Afghanistan.
Post datedcheques for the amount of total incidence of duty and taxes applicable in Pakistan from the importers under ATT regime at the time of release of cargo for transportation should be returned after verification of documents and return of containers verifying the cargo actually crossed the Pak-Afghan border.
Items not consumable in Afghanistan should be put on the negative list and should not be allowed to be imported under ATT.
Additional Rs 15 billion revenue can be generated if effective measures are taken. Customs duty on black tea should be reduced from 10 percent to 5 percent. GST on commercial importers be rationalised to 15 percent and 13 percent on packers/processors. Import of Black Tea through ATT should be restricted.
Dry port usage should be restricted to export oriented industries and the industries that qualify for certain exemptions subject to conditions prescribed in relevant laws/SRO.
All commercial imports should be assessed/examined at the Karachi Port and transported through sealed containers by Pakistan Railways.
Maximum corporate tax rate be reduced to 25 percent for manufacturing and 30 percent for non-manufacturing sector in order to remain internationally competitive in attracting foreign investment.
Monthly Filing of WHT statement should be made on quarterly basis. A deduction of WHT of minimum 3.5 percent be made on all procurement of agricultural commodities by the government.
Service tax should be limited to persons/business units exclusively engaged in service providing activity. Rates should be rationalised and should not be above 0.5 percent. WHT should be limited to those services not yet in the tax net.
WHT paid on electricity bills should be made adjustable for all and in case of taxable persons and companies in FTR, WHT in utility bills should be refundable because it is unjustified to subject them to double taxation once they have already discharged the tax liability.
Time limit of retention of records should be reduced to 3 years from 6 years to bring laws and tax regime in line with international best practices and ensure a fair business environment.
WHT on commercial importers should be brought down to 2 percent and 1 percent for industrial importers to create a level playing field.
Tax rate should remain 20 percent for the companies having turnover up to Rs 1 billion in order to create a favourable business and investment environment.