KARACHI: Dr. Muhammad Ashfaq Ahmed on Monday said the withholding tax (WHT) should be levied on income rather than on transactions.
He was addressing at Karachi Chamber of Commerce and Industry (KCCI). Dr. Ashfaq said that he would recommended abolishing further tax. Besides, he said that rationalizing import tax would help in easing inflation.
Pakistan has entered into IMF programs several times. “The frequent loan programs of IMF makes complex policy making for us,” the chairman said.
He said that the revenue collection is 10 per cent of the GDP. On the flip side the expenditure is 20 per cent of the GDP. “We take loans about 8 per cent of the GDP.
The second biggest problem is current account deficit. “We are dependent on imported things. We are spending huge foreign exchange on import of petroleum products,” he said, adding that the import of palm oil is also very large.
He said that the FBR would surpass the current year’s revenue collection target. He attributed the over the target collection to the business community. “The business community performed well,” he added.
The chairman said that the board had received representations on the CNIC. “The condition of CNIC details is on above Rs100,000 payment,” he said.
Muhammad Idrees, President, KCCI said Karachi is financial and commercial hub of Pakistan. The city has collected over Rs1 trillion so far during the current fiscal year. “Traders of this city need special attention,” he said, adding the FBR is sending notices to already compliant taxpayers. He said that despite FBR efforts the tax net remained narrow.
Idrees recommended a fixed tax regime to broaden the tax net. “This regime will increase the tax revenue.”
Regarding, integration of retailers with FBR, he said that the FBR should evolve a framework to bring retailers into the sales tax net.
Idrees said that the government had granted incentives to pharmaceutical industry. The incentives should be given across the board, KCCI President said.
Zubair Motiwala, Chairman, Businessmen Group (BMG) congratulated the FBR Chairman for achieving tax collection target so far in the current fiscal year. Motiwala said that around 3 million people in Pakistan are in the tax net. Broadening the tax base is only a solution to increase the tax revenue.
He said the retailers are in serious trouble due to difficulties in integration of point of sale (POS) with the FBR system.
The FBR should formulate easy conditions to attract retailers to share their sales and purchase on a real-time basis.
Motiwala pointed that the FBR has exceeded Rs286 billion in tax collection against the target. He questioned how much refund disbursed in additional revenue collection.
Due to these reasons the FBR is also contributing to the inflation. On the other hand, the rupee is depreciating on a daily basis due to disturbed political and economic conditions. He demanded to freeze dollar at Rs150.