Businessmen have urged the government to enhance liaison with the business community to broaden tax base and enhance tax-to-GDP ratio, as new measures taken by the Federal Board of Revenue (FBR) are not bearing fruit as per expectation.
The authorities should improve liaison with the business community, who are the real stakeholders, broaden the tax base and enhance the tax-to-GDP ratio, as the number of active taxpayers has declined by 30% to below 2.2 million, said former Federation of Pakistan Chambers of Commerce and Industry (FPCCI) president Mian Anjum Nisar.
“The revenue collecting agency could only increase the number of sales tax return filers by just 8% during the first six months of the current fiscal year, mainly due to 40% rise in the type of those filers, who have not paid any tax, implying that bad governance and weak management of the tax department persists,” he added.
There is an urgent need to reform and simplify the taxation system with consultation of real stakeholders, besides addressing the issue of double taxation through integration of provincial and federal government laws and harmonisation of FBR and Punjab Revenue Authority, said Pakistan Industrial and Traders Associations Front (PIAF) Chairman Mian Nauman Kabir.
“Unfortunately, only 30% of total sales tax return filers are paying taxes while 70% of the filers did not pay tax,” he said.
New measures taken by the government seem to be inadequate to convince people to file tax returns due to arm-twisting by the FBR, creating unnecessary controversy because of continuous raids on business premises, said Nisar.
He urged the authorities to introduce new tax incentives and extend the period of existing ones to attract new foreign direct investments in line with the potential of the country, he said.
Only direct taxes can improve tax collection, as existing tax system is heavily skewed towards indirect taxation, said FPCCI Senior Vice President Shahzeb Akram.
“A sustainable solution to Pakistan’s problems lies in the structural reforms, as we can see inefficiencies in tax collection, which should be removed,” Akram said, adding,
“So, tax compliance must be improved and tax base should be broadened, which cannot be achieved with a single policy change, but by a systemic approach.”
Nisar said that coordination between government and private sector was vital for economic growth and proposed that the government develop policies that could provide an environment conducive to business.