WEDNESDAY APRIL 27: Farm income may be taxed from July 1: President assures business community

ISLAMABAD: The federal government on Tuesday assured the business community that farm income would be taxed from the budget (2011-12), said Federation of Pakistan Chamber of Commerce Industry (FPCCI) President Hamid Chadda.
Talking to Business Recorder following consultative meeting on the budget proposals with President Asif Ali Zardari and Finance Minister Dr Abdul Hafeez Sheikh, Chadda said the business community has vehemently demanded of the government to tax the agriculture income.
Sources said a number of proposals have been made by the business community and wanted them to be included in the next budget to facilitate investment. The economic team was asked to take immediate step to provide smooth supply of electricity to the industry and implementation of some tax-related proposal from the Federal Board of Revenue. The business community also wants the government should abolish 17 percent sales tax on import of plant, machinery and equipment, which was recently imposed through an SRO.
Business community informed the policymakers that amid over 15 percent markup, the imposition of wealth tax in the budget would be last nail in the coffin of business or trade community. They strongly opposed restoration of the wealth tax in the next budget.
It has also been suggested that the National Tax Number and the Computerised National Identity Card Number (CNIC) should be the same for the facilitation of business and trade. Chadda said the business community wanted imposition of tax on farm income and with effective enforcement by the government they would not pay any additional tax if the government taxes farm income of rich landowners.
Sharing their budget proposals, the rice exporters wanted one window taxation system to facilitate the export process. Under the one window system, all tax processes should be resolved pertaining to rice exporters. Sources said the Pepco Chairman opined that provinces are not co-operating with them in curbing electricity theft. They are also not co-operating in enforcement nor providing protection to the officials of the distribution companies.
The finance minister informed the business community that the amendment to the Constitution is required by the Parliament to enable the federal government to impose tax on all agriculture-related income. All the income related to agriculture is a provincial subject. Presently, agricultural income tax is applicable at the provincial level, but there is a need for enforcement. There are flaws in provincial agricultural tax collection mechanism, which needs to be rectified.
He said the district government is already collecting property taxes, but there is need for improvement in collection of the levy. Both the property tax and agriculture tax falls within the domain of provinces. Addressing the representatives of the Pakistan business community, Federal Minister for Finance and Economic Affairs, Dr Abdul Hafeez Shaikh said we have identified 700,000 new entities which can be taxed, and hopefully inclusion of them into the tax net will necessarily facilitate us in our endeavour to broaden the tax net and improve the tax-GDP ratio.
He said that we are communicating with all the segments of the business and corporate sector of the country to devise a mechanism whereby we can seek new avenues for the generation of income and facilitate them for further investment. He welcomed practical suggestions from them so that the government may decide to accord priority to the resolution of the issues which are emergent and need immediate attention.
The minister while responding to a proposal by one of the participants about taxing of the agriculture sector said that he himself believes that all incomes irrespective of the sources must be taxed, but under the prevalent constitution, agri-tax is a provincial subject. The minister appreciated the role of the private sector as an engine of growth in an open society. In Pakistan the private sector, he said, has been having a positive role, and our government and the ministry of finance has called this forum to accumulate various suggestions and proposals to strengthen their role in developing the economy on sound footing.
On one of the reservations by one of the representatives about the tax refund system, the minister informed the business community that since September 2009 to April 2011 more than 50,000 cheques amounting to more than Rs 40 billion have been issued under a computerised programme of the Federal Board of Revenue. And, he said, we are still struggling to make this tax refund system more transparent and machine operated.
Earlier at the start of the meeting, the minister highlighted the difficult situation when the present government had assumed office, and said there was macro-economic crisis, external situation was grim, and revenue generation has been under severe threat.
Now we have almost overcome the expenditure he said, and asked for more and more suggestions from the business community and other sections of the society to come out with concrete and practical suggestions in this regard so that the squandering of the national remitted wealth be saved and dedicated for further economic development.
The meeting was attended by the President Federation of Pakistan Chambers of Commerce and Industry, KCCI, Rice Exporters Association, Pakistan American Business Council, Pakistan Electric Fan Industry, All Pakistan Private Universities Association, PGMRA, and official of side, Dy. Chairman Planning Commission, Secretary Revenue Division, Secretary Commerce, Governor SBP and others.