Karachi’s businessmen oppose taxes levied by interim setup

Suggest new govt should focus on increasing tax net not taxes in budget.

KARACHI: The leadership of Karachi Chamber of Commerce and Industry (KCCI) on Friday said that the proposed increase in taxes is tantamount to punishing taxpayers, as this is an easy measure for the government to take instead of bringing untaxed people in the tax net.

Speaking at a press conference at the KCCI office, the leadership of the body said proposed tax measures of the interim government were not acceptable to the business community.

Muhammad Zubair Motiwala, vice chairman of the Businessmen Group and former president of the KCCI, termed the caretaker government’s measures as a premature budget announcement and said that the caretaker government should not bring such sweeping changes just few days before the annual budget.

The businessmen lambasted the Federal Bureau of Revenue (FBR) and said that this action by the FBR is indeed a cover up of its failure in achieving revenue targets for the fiscal year 2012-13. “The FBR wants to pass on the responsibility of its failure in collecting taxes to the new government,” they said.



They also said that preparation and implementation of the Federal Budget 2013-14 is a prerogative of the newly elected government expected to take charge in the next 10 days.

An ‘across the board’ increase in taxes by the caretaker government and the FBR has come as a shock to the business and industrial community across Pakistan. The incompetence and lack of will on part of the FBR to broaden the tax base is reflected in the drastic increase in the general sales tax (GST) and the withholding tax (WHT) regimes on existing taxpayers.

Against business community’s demand to bring GST under 10%, FBR proposed an increase in GST to 17% that will increase tax evasion and discourage new potential taxpayers.

“We think these anti-business actions are being deliberately taken by the FBR to support the black economy, smuggling, tax evasion and under-invoicing in the country,” one of the businessmen said.

They also say that abolition of zero-rated regime will have a negative impact on exports of these sectors. While the tax increase on exporters from 1% to 1.5% and 2.0% will increase the problems for Pakistani exporters in the global markets.

They also opposed the increase in the WHT regime on commercial importers from 5% to 6.5%, saying that it will sharply increase the cost of raw materials and open the floodgates for smuggling, under-invoicing and evasion.

The FBR or the Ministry of Finance has not consulted the business community and leading trade bodies at any stage before adopting such measures.

However, the KCCI leaders said that they hoped to have an interactive session with the new finance minister and his team for pragmatic steps for widening the tax net in order to collect required revenue for the country.

Representatives of seven industrial town associations that affiliated with KCCI also participated in the press conference.

Published in The Express Tribune, May 25^th, 2013.

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