ISLAMABAD: Local business community in a meeting at Islamabad Chamber of Commerce and Industry (ICCI) has cautioned the government to desist from any move to impose further taxes on existing taxpayers in order to improve revenue collection because such measures would bring additional woes to trade and industry, make life of common man more difficult and entail harmful consequences for the economy.
Atif Ikram Sheikh, President, Sheikh Pervez Ahmed Senior Vice President and Sheikh Abdul Waheed Vice President, ICCI said that government was reportedly planning to announce some new tax measures to meet the tax targets set for the year 2015-16, however, they stressed that preference should be given to bring untaxed sectors into the tax net instead of putting more burden on existing taxpayers.
They said if government was sincere to improve the tax revenue collection, it should focus on developing a fair taxation system as the current system was marred with many distortions and was not supportive to the growth of business activities.
They said the heavy reliance on withholding taxes was not a right approach as these taxes were putting lot of pressure, especially on small enterprises and hindering the better development of SME sector that was an engine of growth for economy.
They said the prevailing tax system has also forced industrial sector to pay disproportionately high taxes as compared to agriculture and services sectors while under a fair tax system, all sectors of the economy have to pay tax according to their share to the national income.
They said that FBR was collecting about 60 percent of its tax revenue from indirect taxes that were regressive in nature as they have reduced the disposable income of the common man and affected the growth of business activities as well.
They emphasized that government should focus on direct taxation that was progressive in nature and would help in improving the overall tax revenue of the country.
They said government should immediately end all exemptions given to various sectors of the economy as these exemptions were a major source of tax distortions and big hurdle in expanding tax base. They identified multiplicity of taxes, lack of adequate incentives to file taxes and trust deficit between tax collectors and taxpayers as other major factors for low tax-to-GDP ratio in the country.
They called upon the government to address these issues on priority to improve tax revenue collection and put the economy on the path of sustainable economic growth.