KCCI issues budget proposals

Urges widening of tax base and relieving already burdened sectors.

KARACHI:

The Karachi Chamber of Commerce and Industry (KCCI) sent budget proposals for the year 2011-12 to the government on Wednesday.

In the 75-page report, KCCI included recommendations for all major sectors and stressed the need for reducing taxes on already burdened sectors and levying taxes on untapped ones.

KCCI President Mohammad Saeed Shafiq, in his foreword, stated, “KCCI is fully aware of the present situation of the economy and as such feels the dual responsibility of looking after the interests of its members and at the same time strengthening government’s efforts for revenue generation.”

The following are some key recommendations:

• Tax on agricultural income: Every income, when earned, should be taxed to create a sense of equity and justice.

• Withholding tax on importers: Withholding tax on importers was increased to five per cent. Imposing such high taxes is unfeasible and should be reduced to four per cent.

• Regulatory duty: Regulatory duty imposed on various items is causing loss of revenue in real terms and should be abolished.

• Worker’s Welfare Fund: Income of welfare funds should not be taxed, while books of accounts should be made public.

•   Advance tax on electricity: It should be made adjustable for every person without any threshold and rates for commercial and industrial consumers should be made equal.

• High rates of sales tax: 17 per cent is one of the highest rates all over the world, which induces tax evasion, corruption and smuggling. GST should be reduced to 10 per cent for expansion of the tax base, reduction in smuggling and corruption, which will consequently increase government revenues.

• Broadening of sales tax base: Three years amnesty from audit should be introduced to encourage new taxpayers.

• Multiple rates of sales tax: Rates of sales tax at 17 per cent, 18.5 per cent and 21 per cent are too high, there should be a uniform rate.

• Duty on CNG compressor: Existing five per cent duty on the import of CNG compressor should be waived and no other taxes should be levied.

Published in The Express Tribune, May 12^th, 2011.