Budget proposals: ICCI for broadening tax base sans new levies

The Islamabad Chamber of Commerce and Industry (ICCI) on Saturday proposed broadening of tax base in the upcoming budget 2011-12 without imposing any new taxes.
The ICCI has proposed creating an integrated data warehouse for sharing the information about transactions, broadening the tax base, promotion of tax culture, reducing tax gap, increasing the initial tax-exemption base, capacity building of the retailers, wholesalers and of the general public, active taxpayer scheme and recognition of high taxpayer and making tax compliance simple and easy.
According to the proposals, the trade body favours implementation of a judicious tax system in Pakistan and supports all reform measures that would achieve the desired objective. It has been proposed that immediate steps should be taken by the FBR to reduce the difference between the number of persons holding national tax numbers and the numbers filing the yearly income tax returns.
The non-filers of returns should be penalised to encourage the culture of compliance with the tax laws. Moreover, effective measures must be taken by the FBR to bring undocumented sectors into the tax net. The proposals emphasise on the documentation of the economy. It is therefore, suggested that the concept of final tax should be abolished adopting step-by-step method so that all sectors become taxable under the normal tax regime on the basis of their declared income, as calculated from their audited accounts.
The proposals said that with the increase in the support prices in recent years, farmers' incomes have also increased, however, this surge in the income of the rural population has not resulted in contribution to the government in the form of the income tax. The paper suggests that the provincial laws relating to the taxation of agricultural income should be implemented in letter and spirit and a mechanism be devised through which the FBR will be able to collect such taxes, which can then be passed on to the province.
The FBR may consider working on the suggestion of preparing an active taxpayer scheme through which active taxpayers are issued with cards and are offered some incentives. These benefits could include reduced rate of mark-up on bank loans, better facilities at Nadra offices, airports, the passport office and banks, concession of Haj expenses, etc.
The proposal suggests that to promote the tax compliance culture among the public, it is of the utmost importance to educate students from a very early age about their responsibility to pay tax, which is vital for the development of the country. Therefore, the trade body suggested changing in the syllabus system to create awareness among the young generation about the tax responsibility.