The Islamabad Chamber of Commerce and Industry (ICCI) has forwarded comprehensive proposals to the finance ministry, suggesting the broadening of tax base in the upcoming budget without imposing new taxes.
ICCI in collaboration with the Association of Chartered Certified Accountants (ACCA) has formulated a working paper, proposing the government to take some key measures to create a better atmosphere for revenue generation and ultimately for economic growth.
Some key proposals suggested by ICCI are:
• Agriculture income tax: Provincial laws relating to the taxation of agricultural income should be implemented and a mechanism should be devised by which the Federal Board of Revenue (FBR) could collect such taxes, which can then be passed on to the provinces.
• Reducing tax gap: FBR should take immediate steps to bridge the difference between the number of people holding national tax numbers and those filing yearly income tax returns. Non-filers of returns should be penalised as per legal provision to encourage a culture of compliance with tax laws. Moreover, effective measures must be taken to bring undocumented income into the tax net.
• Documentation of economy: The concept of final tax should be abolished through a step-by-step method so that all sectors become taxable under the normal tax regime on the basis of their declared income.
• Creating an integrated data warehouse: The first step in this direction would be sharing of information between FBR and other organisations such as National Database and Registration Authority (NADRA), Securities and Exchange Commission (SECP), State Bank, financial institutions, electricity and gas-providing companies.
• Capacity-building of people: In order to promote a tax compliance culture, it is necessary to educate students from a very early age about their responsibility to pay tax. Therefore, a change in the syllabus is suggested to create awareness in young generation about tax responsibility.
• Active taxpayer scheme: FBR may introduce an active taxpayer scheme through which active taxpayers are issued with cards and are offered some benefits. These include reduced rate of mark-up on loans, better facilities at NADRA offices, airports, passport office and banks.
Published in The Express Tribune, May 15th, 2011.
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