Increase in Sales Tax will Lead to Corruption and Underinvoicing: Pakistan Tanners Association

Karachi, June 13, 2013 (PPI-OT): Under Federal Budget 2013-14 the government has increased Sales Tax from 16% to 17% to increase its Revenue Target. But higher percentage of Tax always gives birth to malpractices such as underinvoicing and other corrupt practices. As a result the government may lose both Sales Tax and Customs duty due to underinvoicing on imported items. On the other hand the general public will face more inflation and prices of all commodities will increase.

Secondly the government has planned to face balance of payments through foreign investments by auctioning 3G license and some other measures, whereas, it would have been prudent to bring export friendly policies and built our foreign exchange reserve through increase in exports and by applying import substitute measure. This was stated by Agha Saiddain, Chairman Pakistan Tanners Association (Central).

He further said we were expecting more creative budget from Ishaq Dar but his budget speech was traditional and routine like past. Keeping in fiscal deficit of 8.8 percent of current year with huge public debt of Rs. 14284 Billion the revenue target of Rs. 2598 Billion is insufficient as such the real budget is hidden under apparent budget announced by the government.

Agha further added that the previous government violated Debt Limitation Act 2005 and allowed Public Debt to grow by 88% in the last five years. Pakistan can easily manage higher tax collection by expanding tax base and by bringing more people in tax net including agricultural sector.

Why a person with large landholding is exempted from tax payment is beyond normal common sense. At first stage government may impose agricultural tax on landlords with huge landholdings and gradually bring it down to the reasonable level.

Agha appreciated the decision of present government to start Railway Line between Kashghar and Gawadar. He said Prime Minister Nawaz Sharif will be known as second Sher Shah Suri if he implements this project. He requested PM to hold serious meeting of all stakeholders and create consensus on KALA BAG DAM Project which if not implemented would be historical blunder.

For more information, Contact:
Pakistan Tanners Association
46-C, 21st Commercial Street,
Phase-II, Extn.,
Defence Housing Authority,
Tel: +92-213-588 0180, +92-213-588 0184, +92-213-589 9819
Fax: +92-213-588 0093

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