Broad-based, fair and inclusive tax structure proposed

Pakistan Business Council launches National Business Agenda 2010.

KARACHI: Pakistan Business Council (PBC) has called for early implementation of reformed general sales tax. Addressing the launch ceremony of the National Business Agenda 2010, Chief Executive Officer PBC Kamran Mirza said that “a tax to gross domestic product (GDP) ratio of 10 per cent is obviously not sustainable.”

Pointing out that the same ratio in India and Bangladesh stands at 17 and 14 per cent respectively, Mirza highlighted the proposals put forth by PBC to the government.

The National Business Agenda 2010 proposes the introduction of a board-based sales tax, tax on currently exempted sectors like agricultural income, services and real estate as well as mandatory filing of returns for certain categories of individuals.

The agenda also calls for providing a level-playing field for industry by “bringing the commercial importers into the normal tax regime, taking measures to reduce the abuse under the Afghan transit trade agreement, steps to reduce the impact of under-invoicing and more transparency in tax collection,” explained Mirza.

Mirza contended that private companies are bearing the brunt of taxes in the country. “The formal manufacturing sector, which accounts for almost 16 per cent of the GDP, is paying about 63 per cent of the direct taxes,” he said.

He also built the case for allowing companies to use part of the proceeds from workers’ profit participation fund and workers’ welfare fund. “Currently this money goes to the government and the intended recipients do not avail its complete benefit,” said Mirza, adding that “allowing companies to allocate part of these funds will let them contribute more to employees and the adjoining communities.”

Addressing the gathering, Andrew Wilson, Regional Director Centre for International Private Enterprise highlighted that “in countries receiving international donations and assistance, the input of international agencies trumps that of local businesses.” He urged the country’s private sector to engage the government in dialogue and actively lobby for business interests.

Participants at the event also asserted that public sector companies get preferential treatment from regulators and urged that these companies should also adopt good governance principles to bring them at par with the private sector.

Published in The Express Tribune, November 11^th, 2010.