Business community urges govt to revisit budget

KARACHI: Zubair Ahmed Malik, President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), business leaders Tariq Sayeed and SM. Muneer, Zakaria Usman Chairman FPCCI Working Group on Federal Budget, Mian Zahid Hussain, Chairman FPCCI Standing Committee on Sales Tax and Mian Shaukat Ahmed, Chairman FPCCI Standing Committee on Direct Taxes have urged Mian Nawaz Sharif, the Prime Minister and Ishaq Dar, the Finance Minister to revisit a few provisions of the Federal Budget in consultation with FPCCI, as the business community has some reservations on some proposals of the Budget and fears that it will adversely affect the poor masses of the country, as well as the business community, particularly the industry, which is already confronted with many challenges e.g. load shedding, energy crisis, poor law and order conditions, etc. They further said that in the recent Budget no incentives have been announced for industries which play a significant role in the economy of Pakistan.
They were of the view that if the Budget is implemented in its present form, it will cause closure of industries, increase smuggling, promote corruption and further fuel inflation. At this point of time when industries are striving for survival, our country cannot afford such initiatives, which exist nowhere in the world, taking us back to the undocumented economic regime. They further said that the Federal Budget has made Pakistani goods uncompetitive in the region and the main focus has been on collection of taxes and revenue generation from the existing taxpayers. They regretted that no relief/incentives have been given to taxpayers which might have broadened the tax base. In fact, the former Chairman of FBR had assured

FPCCI that FBR, on the basis of data available with it, has identified 3 lakh persons that would be brought within the tax net, but no measures had regrettably been introduced in the Bill.

It is obvious that 1% increase in sales tax will have a multiplier effect on prices, making the consumer goods unaffordable for the masses. Moreover, the increase in petroleum prices has badly affected the cost of doing business. They said that Government has failed to bring the wholesale and distribution network and retailers within the sales tax net, and as such the entire burden to collect additional amount of sales tax has been passed on to the manufacturers, producers or importers of these items. Such an amendment of sales tax laws negates the spirit of value added tax.

After the announcement of Budget on June 12, 2013 a series of meetings of the FPCCI Working Group on Budget were held at FPCCI wherein several proposals have been prepared for taking up with the Government. Chairman of FPCCI Working Group on Budget Mr. Zakaria Usman said that the business community agreed in principle with the concept of CREST U/S 2(5AC), but it

is not being applied by the department in letter and spirit due to teething problems and taxpayers are being unnecessarily harassed. In this context, it is requested that some time should be given before implementation of CREST to discuss its modalities with FPCCI. Moreover, on Section 21(4) he proposed that input tax adjustment/ refund may be blocked after completing due process and recording of reason in writing. Referring to the measure on Sales Tax record U/S 22, he said that registered persons are required to maintain and retain gate passes, inward or outward, and transport receipts as sales tax record.

The increasing compliance cost of keeping a plethora of records in this age of technology would overburden genuine taxpayers unnecessarily. He also said that for monitoring or tracking government has again tried to implement the old Central Excise Law 1944, which is an invasion of privacy and against the spirit of FBR reforms which are meant to facilitate taxpayers and restore their confidence. For Section 40(B), he suggested that the power of posting Inland Revenue Officers should rest with

FBR so that the confidence of the taxpayer, a prerequisite of the success of any scheme, is not shattered. Moreover, regarding Appeal U/S 45(B), the time limit of 30 days may be removed.

Referring to the introduction of Income Support Levy at the rate of 0.5% on all moveable assets he said that this move will discourage investment in Pakistan one side and encourage black market on the other side. He said that it seems like the wealth tax regime which only exists in very few countries of the world, is being brought back in Pakistan.

He lamented that furnishing of bank data to FBR will discourage depositors from depositing savings in banks on one hand and encourage the growth of the black economy on the other. FPCCI is also of the opinion that the increase of turnover tax to 1% U/S 113 of IT Ordinance shall have a negative impact on industrialization and hence it should be brought down to the previous level of 0.5%. He suggested that the depreciation allowance should be restored to its previous level of 50% from the proposed reduction to 25% because it will hurt the BMR activities of the industry. Furthermore, he said that the power to select cases for audit on the basis of parametric computer random balloting should be retained with FBR instead of with the IR Commissioner as proposed in the Finance Bill as it will again encourage corruption and increase harassment of the taxpayers due to misuse of power.

While shedding light on FPCCI’s budget proposals, which were submitted to the Federal Board of Revenue and the Ministry of Finance, President of FPCCI said that FPCCI’s budget proposals were compiled with the input from trade bodies located throughout the country, and after review by experts, they were forwarded to the Government of Pakistan as the collective recommendations of the entire country’s business community. However, he expressed dismay that the FPCCI budget proposals were not considered by the Government when drawing up the Federal Budget for 2013-14, despite the fact that they were reflective of the aspirations of the entire business community. As a result, the Budget in its present form is in fact is not acceptable to the country’s business community, since it is not sufficiently business friendly.

The President of FPCCI has therefore invited the Finance Minister and Chairman FBR to hold a meeting with FPCCI to discuss the harsh and irritant measures in the Finance Bill 2013 with a view to improve its impact on trade and industry.