Karachi, October 10, 2023 – The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has voiced deep concerns regarding reports of a potential new wealth tax being considered in the country.
This development has sparked apprehension within the business, industry, and trade community, prompting the Acting President of FPCCI, Muhammad Suleman Chawla, to address the issue.
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Chawla emphasized that the business community is troubled by the news that a revamped form of wealth tax is being contemplated as a means to meet the stringent conditions imposed by international financial institutions (IFIs). He stressed, “We have consistently maintained that business, trade, commercial, and economic activities should be incentivized rather than discouraged.”
In his statement, Chawla elaborated that wealth or asset-value taxes on movable assets or properties should not be levied on savings, investments, working capital, stock-in-trade, equity holdings, and capital assets of businesses. Imposing such taxes would be counterproductive and could lead to a contraction of the documented or formal sector due to excessive taxation, creating disincentives for taxpayers.
Chawla further emphasized that retroactive taxation on personal or business income, assets, and properties cannot be justified as it would discriminate against those who have contributed significantly to the country’s economy through industrial production, commercial activities, exports, employment generation, and revenue mobilization.
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The FPCCI Acting President highlighted that the most practical and sustainable approach to increasing tax revenues is to incentivize trade and industry within the country, thereby encouraging more economic activities. This strategy, he argued, is preferable to demotivating businesses and potentially causing a flight of capital to countries that offer attractive incentives such as free land, civic infrastructure, affordable utilities like electricity and gas, and exemplary law and order environments.
Chawla also criticized the ongoing imposition of the super tax, which he believes disproportionately burdens productive sectors of the economy that are already subject to taxation. FPCCI has consistently advocated for the broadening and simplification of the taxation system, as further squeezing active tax filers is no longer a viable option.
In response to these concerns, Chawla called for the abolition of Section 4C of the Income Tax Ordinance, 2001, to put an end to rumors of a new form of wealth tax. He urged the government to acknowledge and appreciate those who generate economic activity in the country.
He concluded by stating that businessmen already fulfill their tax obligations across various categories, including their businesses, personal income, and properties. Therefore, imposing discriminatory and excessive taxes on them is futile and unacceptable.
The concerns expressed by the FPCCI shed light on the ongoing debate surrounding taxation policies and their impact on Pakistan’s business and economic landscape. As discussions continue, it remains to be seen how the government will address these concerns and balance the need for revenue generation with the interests of the business community.
