Traders seek out-of-the-box solutions in budget

Call for end to tax that has discouraged value addition altogether


Our Correspondent March 31, 2021
People are shopping in a crowded market of Rawalpindi where traders refused to follow lockdown orders issued by the Punjab government.. PHOTO: ONLINE

KARACHI:

Businessmen have demanded out-of-the-box solutions to Pakistan’s economic problems in the budget for 2021-22 to address the diverse challenges emerging due to the Covid-19 pandemic, which have severely hampered growth and boosted the undocumented economy of the country.

In a statement on Tuesday, the Karachi Chamber of Commerce and Industry (KCCI) demanded a shift from the usual budget template which was used every year and followed through multiple Statutory Regulatory Orders (SROs), amendments, rules, notifications and clarifications.

KCCI President Shariq Vohra pointed out that 3% value added tax on commercial import of raw material, which was removed in the Finance Act 2019, was re-imposed in Finance Act 2020.

Calling for an end to the value added tax, he highlighted that due to the levy, commercial importers did not add any value to the raw material and instead, they resorted to selling the merchandise in the same form as it was received.

“The rate of sales tax in the country, at 17%, is the highest in the region,” he said while voicing concern. “Such a high levy disincentivises documentation and compliance.”

He was of the view that high indirect taxes had supported smuggling, tax evasion, under-invoicing and misdeclaration of goods.

He demanded that sales tax should be restricted to single digit on all sectors in order to help reduce the cost of inputs, which would in turn reduce prices of consumer goods and exports.

KCCI Senior Vice President Saqib Goodluck said that the CNIC requirement for purchase of merchandise worth Rs100,000 and above had promoted cash economy and undocumented transactions. “The CNIC condition has caused the economy more damage than good,” he said.

According to him, the CNIC requirement should have been optional and treated as the sales tax registration number (STRN), if provided in return by a registered person.

The concept of treating withholding tax as the minimum tax on various sectors and registered persons had severely eroded credibility of the entire tax regime, he said.

The SVP stressed that withholding tax should be adjustable against the actual tax liability because converting it to the minimum tax was a hurdle in the way of compliance and forced many people to opt out of the tax regime.

In addition, 3% tax on sales to unregistered people should be removed, he said.

Published in The Express Tribune, March 31st, 2021.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.

Our Publications

RELATED

COMMENTS

Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ