In a bid to lower expectations, the Tax Reforms Commission (TRC) has decided to restrict its work to reviewing tax policies and would consider only those recommendations of the industry that are unanimously moved by all trade bodies.
The decision to keep the 20-member commission restricted to macro issues was taken during the first meeting held here on Saturday at the Federal Board of Revenue (FBR) office. The maiden meeting was chaired by Finance Minister Ishaq Dar, raising concern over the commission’s independence.
The federal government has appointed Masoud Naqvi – a renowned chartered accountant –as the TRC chief. In his budget speech, Dar announced to constitute a TRC aimed at rationalising all the taxes in order to make the system more transparent.
According to experts, the corporate and individual tax system was against the principles of fairness. The system lessens the burden on one segment of society at the expense of the other. Similarly, import tariffs are structured in a manner that protect a few pampered industries and discourage competition and entrance of new players in the market.
The issue of increasing expectations from the TRC and its ability to meet them was raised by FBR Chairman Tariq Bajwa. He was of the view that the commission cannot deal with all problems and operational issues being faced by the industrialists should not be discussed at the commission.
Unlike small commissions, the government has constituted the 20-member TRC to represent all main chambers, federation, politicians, chartered accountants and retired bureaucrats. The industry – which is the major beneficiary of the present taxation system – bringing issues to the body that has been constituted to address them in the first place raises question marks over the government’s real intention, according to tax experts.
However, Naqvi said the commission would entertain only those recommendations of the industry that are unanimously moved by all representative chambers and forums. He said the commission would not consider the individual proposals of the industrialists.
Burden on TRC’s shoulders
While speaking at the forum, Dar said that high hopes were pinned on the TRC to suggest measures for ensuring equitable taxation as well as enhancement in the tax-to-GDP ratio, which was one of the lowest in the world, according to a handout issued by the Ministry of Finance.
Dar said that members of the TRC may finalise their proposals on priority so that these could be shared with all stakeholders, prior to placing them before the Parliament and incorporating them in the next budget. He urged the members to come up with realistic recommendations, the hallmark of which should be facilitation of taxpayers and a client-friendly system which is completely transparent.
The minister said there was broad-based representation in the commission; both houses of the Parliament, the business community, professionals, chambers and the civil society were all covered with a view to chalk out a comprehensive plan to revamp the revenue collection system.
He also called upon the commission to put forth suggestions for devising a proper appellate system to effectively dispose litigation cases.
“The litmus test of the recommendations would be the implementation in the short run and increase in revenue in the medium term,” he said.
Published in The Express Tribune, October 19th, 2014.
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