Budget to ensure fair, equitable taxation: ACCA

ACCA Pakistan considers Federal Budget 2011 to be aiming for increasing the tax base by acknowledging the need of having rational, fair and equitable taxation. Giving detailed comments on the budget, here on Tuesday, ACCA said that devolution of certain significant budgetary decisions to provinces last year with agriculture being a provincial subject, provincial budgets, to be announced shortly, would assist in the assessment of effective utilisation of funds.
The budgets would also outline provincial education, health, and social development priorities for future as well as their willingness to think of out of box revenue raising measures, which are extremely essential for socio-economic entrepreneurial development of provinces.
ACCA suggests that the accountability, transparency and efficient record keeping of funds usage by provinces would benefit from investment in financial reporting, accounting, auditing and financial management skills and knowledge. With professionalism, the theme of public sector reforms around the world, budget acknowledgement of the need for reforms in Pakistan's public sector provides an opportunity for consideration of the need to seek professional expertise in areas of taxation, auditing, corporate governance, financial reporting and financial management. Similar to last year, salaries of federal government employees have been increased. As the perceived outcomes of the salaries' increase were improved efficiency, performance and motivation, development and communication of performance measures in annual reports or web-site would help the taxpayers appreciate the utility of the salary increases and the improvement in services offered to general public. It is of benefit to society, individuals and businesses if there is a clear link between tax take and its pay back benefits, it said.
ACCA said that with the international focus on stakeholder-aligned sustainable business model, focused and professional regulations envisaged by the budget should discourage ticking the box approach to regulations and instead focus on simplicity of regulations creating a business culture where probity and openness of business operation and disclosure is rewarded. In context of taxation laws the burden of tax should not fall unfairly on taxpayers that play by the rules and pay their fair share.
In the absence of social welfare schemes for underprivileged population and declining social development funds, poverty alleviation through creating an enterprise-friendly taxation and business environment requires serious consideration. The translation of the resolve to unleash the potential of youth entrepreneur-ship in new creative cities into action is urgently needed given that more than half of our population is under the age of 30 and not all of them are educated or employed. The time taken in the planning and creation of creative cities could be utilised by the potential entrepreneurs business management, marketing, social media, accounting, financial management and auditing skills and knowledge building.
With water management as a budget priority, tax benefits to water effluent treatment plants and encouragement of carbon credits schemes could have sent a strong message to international buyers and businesses about Pakistan's resolve to environmental stewardship, this may have created a competitive advantage for businesses. ACCA considers the phasing out of the federal excise duties and the withdrawal of exemptions and concessions as the right step in the direction of simplification of taxation system. The implementation of the resolve to widen the direct tax base by inclusion of a large number of taxpayers through strict enforcement is essential for creation of a perceived fair taxation system. Urgently needed enterprise growth would be assisted by increase of tax credit in establishment of listed companies and allowance of BMR expenditure as a deduction.-PR