In its shadow budget submitted to the Federal government, FPCCI had proposed for a commission to consider its sales tax proposal of single stage and single digit non-adjustable sales tax. FPCCI had recommended to the government to introduce a No input/ no refund mechanism in sales tax. This would instantly result in positive cash flow for businesses, said FPCCI release on Monday.
President FPCCI stated that if the government agrees to bring the rate of sales tax down to 5 percent on domestic stage, 8% at import stage and 0.5% at retail stage, this will help reduce the cost of doing business, lowering inflation, providing relief to common man, eliminate corruption and contain smuggling. Zakaria Usman further said Pakistan can never reach the real tax potential unless fundamental reforms in tax policies and tax administrations are made and tax compliance made easy.
He applauded the bold and visionary decision of the Prime Minister to direct for formation of a commission to consider single stage, single digit not adjustable sales tax regime and FBR to revert back to circle based system to reduce tax compliance burden of businessmen and bring about accountability and deficiency in FBR Zakaria Usman with his core team had met Federal Finance Minister Senator Muhammad Ishaq Dar on three occasions to discuss the possibility of this proposed sales tax scheme.
He said FPCCI the apex body along with its member associations is willing to partner with Government in increasing the tax base and tax revenue for the government. With the proposed scheme, the Sales Tax revenue is projected to rise to about Rs 1500 billion compared to the present sales tax revenue of about Rs. 900 billion with no extra burden on exporters.
He said the present system of sales tax is complex and there are only 19,387 sales tax filers, he maintained. FPCCI Chief was of the view that the present sales tax system has failed to achieve the results.