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ISLAMABAD: President Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Naseer Hayat Maggo has proposed fundamental changes in the taxation structure with the objective of simplifying the tax structure which was always advocated but resisted by pressure groups.

“We continued to complicate taxation statutes, which have never served anything good to the country and we are still discharging the burden of low collections as short comings on the taxpayers instead of on tax machinery,” said Nasser Hayatt Magoo in a chat with Business Recorder.

Magoo said that it is time that the taxpayers are appreciated instead of being called tax cheats and efforts be made to broaden the tax base. He said that the performance of FBR can be gauged from the simple case of last year’s collections under direct taxes as less than Rs 1.6 trillion, out of which Rs 1.2 trillion were advance taxes.

After collection of arrears, hardly any direct tax was collected through returns. The gross collections by FBR in direct taxes were hardly 4% of direct taxes collected last year. Tax payers are vilified in political circles. The tax collecting agency does not even respond to letters of taxpayers, trade bodies, a situation which the FTO has taken notice of.

The committees formulated by FBR comprising of market practicing tax lawyers and tax consultants move to create a market for their services instead of doing any good to the tax system in the country. They are not stakeholders and FBR is undertaking the exercise on budget making in absence of consultation with real stakeholders.

He said that some of the features fundamental to a paradigm shift in taxation structure, for which he has sought a meeting with the Prime Minister, must include: (i) broad, flat, low rate and predictable taxes; (ii) a paradigm shift is required to restructure the entire tax system; (iii) tax system to induce more investment, accelerate growth to ensure economic prosperity; (iv) complex income taxation to change to flat rate taxation; (v) distorted/multiple sales tax to change to single stage sales tax; (vi) single stage, single digit sales tax on goods at the proposed rate of 5% across the board with no exemption will increase the revenue; (vii) sales tax for exporters should be zero rated regime; (viii) the sales tax exemptions should be on food, live saving drugs, educational instruments; (ix) import based taxation at low rate customs duties without additional custom duties, regulatory duties; (x) domestic production substituting the imports should be encouraged by cascading of import duties by increasing the HS Codes from 8 digits to 12 and onward as is being followed by other countries for protecting domestic industrial products;(xi) tax collection agency FBR as National Tax Agency;(xii) appellate tax system independent from collection and executing tax machinery in conformity with constitution;(xiii) bill of rights for taxpayers to protect case of retaliation by tax collecting agencies;(xiv) appreciate move of government to separate the tax policy unit from tax collection agency (FBR) so that the revenue bureaucracy is not fundamental to Finance bill but ease and growth would be the foundations of Finance Bill;( xv) the agents of sales, retailers have also to be put to rest by single stage and low sales tax in order to numerically add to broadening the tax base as presently this issue remains unsettled;(xvi) the condition of CNIC needs to be withdrawn as it is impeding sales and production; and (xvii) nowhere in the world is the buyer asked to provide his CNIC and this has already reduced substantial sales tax collection, and acknowledged by FBR; the CNIC condition therefore should be withdrawn.

Copyright Business Recorder, 2021

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