Karachi, September 3, 2024 — The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) issued a vehement denunciation on Tuesday against any potential plans to introduce a mini-budget aimed at generating additional tax revenue.
In a powerful statement, FPCCI President Atif Ikram Sheikh condemned the proposal, asserting that the business community has reached its breaking point with what he described as relentless and unjust taxation measures.
President Atif Ikram Sheikh did not mince words in his criticism, stating unequivocally that the FPCCI “vociferously opposes any further increase in taxation on already heavily taxed classes or sectors.” He also lambasted the government’s inclination towards advanced tax collection, withholding tax (WHT), or any high-handed at-source deductions, labeling them as punitive measures that have pushed the business community to the brink.
Sheikh emphasized that the business, industry, and trade communities have borne the brunt of these oppressive tax policies for too long, and they “can no longer withstand any additional burden.” He reiterated FPCCI’s stance, calling for a comprehensive overhaul of the taxation system in Pakistan. “What we need in Pakistan is the broadening of the tax base, simplification of the tax filing system, and taxation reforms that are economically sound,” Sheikh insisted. He further called for an end to what he described as “harassment and maladministration” within the tax collection machinery, urging the government to abandon regressive and contractionary taxation measures that stifle economic growth.
Highlighting the dire state of the current tax system, Sheikh pointed out that withholding tax accounts for a staggering 70% of all direct taxes collected in sales tax mode, as per FY24 data. He described this figure as “alarming, to say the least,” and criticized the government’s rumored plans to increase WHT further to appease the International Monetary Fund (IMF). “This is not a sign of good performance,” Sheikh declared, “but a miserable attempt to fabricate progress.”
He warned that any move to implement increased WHT would necessitate the introduction of a supplementary finance bill or a mini-budget, which would have dire consequences for investor confidence and economic stability. “A mini-budget invariably diminishes investor confidence, triggers capital flight, leads to the closure of industries, and sows distrust among trading partners,” he cautioned.
Sheikh also underscored the ineffectiveness of the current tax strategy, noting that it does not reflect genuine economic growth or a positive trend in commercial activities or consumption. He pointed out that the Federal Board of Revenue (FBR) has already suffered a shortfall of Rs 98 billion in the first two months of FY25, with projections indicating a further shortfall of up to Rs 100 billion in the third month. “There is no economic or export growth in the country,” he lamented.
In conclusion, FPCCI President Atif Ikram Sheikh outlined the only viable path forward: stimulating economic activity by drastically reducing the State Bank of Pakistan’s key policy rate, rationalizing electricity and gas tariffs to align with regional competitors, ensuring continuity and reliability in macroeconomic policies, and broadening the tax base to include untaxed sectors. “This is the only workable solution to generate more taxes and foster sustainable economic growth,” he asserted.