LCCI chief for ground-reality based reforms

Lahore, April 11, 2018 (PPI-OT): Taxation system needs reforms based on ground realities and due consultation process with the stakeholders to ensure result-oriented policies for the businessmen. Harmonization in tax system across the country is also a must to get rid of the issue of dual taxation. In a statement, the LCCI President Malik Tahir Javaid said that though amnesty scheme is good step to bring out-of-country capital into the country but these cannot be productive until and unless major issues like “withholding tax on banking transactions” exists.

He said that over the years FBR could not satisfy all its stake holders i.e. the State as well as tax payers with 1.2 million filers out of total population of 210 million fetching hardly revenue collection of 12 to 13% of the GDP and unhappy stakeholders across the board, speaks of FBR’s failure so far. It is further repeated from the international ranking of paying taxes, which is at present 172 out of 190 countries of world which indicates very unhappy situation.

The LCCI President said that neither the existing system is economically neutral, taxpayer friendly, equitable, progressive nor facilitative and supportive to generate healthy business activities for all. Taxation is of course important source of revenue collection but tax policies must be based on the best international practices and universally accepted canons of taxation.

He said that it is a matter of serious concern that with the existing narrow tax-base, the policy makers instead of revolutionize the tax policy options, seems defendant on the burdening of the existing taxpayers whether corporate, (LSE and SME) salaried, individuals and certain other documented sectors of the economy. He said that repetition of such policy option coupled with unbridled withholding tax regime, tariff structures leading to protectionism and creating hurdles to make in “Pakistan’s Agenda”, to promote the domestic industry is perhaps the major obstructing and responsible factor for all difficulties be faced on economic front at present.

LCCI President was of the view that various distortion in the existing tax policies can be removed if the feedback of all the representatives of business organizations is given due consideration by the FBR authorities. It is universally admitted fact that public policy makers can make noticeable difference by linking their mind-set to ground realities.

He said that section 38-B of Sales Tax Act, 1990 is being adversely used by the officials of tax department. They are paying illegal visits to markets and godowns to unjustifiably harass the business people. They not only take coercive measures to raise unlawful tax demands without providing any supporting document but also carry all the available records with them. We are of the view that teams from tax department should visit the markets, if indispensable, but they should be bound to follow due legal process and immediately stop harassing business community. He said that FBR may convene a meeting to be attended by all the Chambers of Commerce, prominent representatives’ bodies, Associations and may lay down uniform and transparent policy guidelines for the field formation.

“Unjust and encroaching mind-set of field formations has drawn the confidence level between the FBR officials and the Taxpayers at the lowest level. Illegal taxation coupled with illegal recovery though bank account attachment is genuinely harassing and creating hardship for the business community. Recovery through attachment of accounts should not be allowed at all, unless the taxpayer has availed facility of stay of demand at LIT (Appeal) and ITAT level. It is pertinent to mention here that finances of business people in their bank accounts help sustain their business while when they are withdrawn by the department, it tantamount to sudden business death”, the LCCI President added.

While calling for reduction in Number and Frequency of Taxes, the LCCI Senior Vice President Khawaja Khawar Rashid said it is a hard fact that number of taxes and frequency of paying taxes must be reduced. Moreover, taxes may be paid quarterly instead of every month. For that matter, all para-tariffs must be merged in the main tariffs. Similarly, there should be electronic communication between taxpayers and tax departments. These proposals can make noticeable difference and win the confidence of taxpayers.

For more information, contact:
Information Department
Lahore Chamber of Commerce and Industry (LCCI)
Lahore -54000, Pakistan
Tel: +92-42-111-222-499
Fax: +92-42-36368854