KARACHI: Karachi Chamber of Commerce & Industry KCCI has taken strong exception to the recent moves by FBR to prematurely implement the financial measures for 201314 well before the actual time line for announcement of new budget for the coming financial year.
President KCCI Muhammad Haroon Agar in a statement on Thursday said that business community has been alarmed by the unusual actions by FBR out of established practices and under duress of the IMF, which are aimed at imposing extraordinary taxation measures on the law-abiding tax payers who are already burdened with high rates of Sales Tax, Income Tax and Customs duties. The FBR or the Ministry of finance have not consulted with business community and apex bodies at any stage before adopting such drastic measures.
In a news item published in the press section it has been reported that “With only 25 days left before it’s term ends, the government has finalized ambitious taxation proposals resulting in additional tax burden of Rs.461.0 Billion mainly on the existing tax payers while the proposed tax revenue target has been enhanced to Rs.2651.0 Billion”. The report further adds that these measures have been shared with Ministry of Finance and the IMF.
The President stated that chambers and business community all over Pakistan are in the process of preparing budgetary proposals and recommendations for the year 201314 but it seems the FBR and Finance Ministry have decided to forego with the established practice of considering the proposals and recommendations of the apex bodies and go ahead with their taxation measures for 201314 without taking the business community on board.
Clearly the FBR has failed to achieve the revenue targets for 201213 and has now attempted to shift the responsibility on existing tax payers who are already overburdened. FBR’s efforts to broaden the tax base are only cosmetic and instead of bringing those untaxed individuals with massive wealth and substantial income into the tax net, FBR is using the conventional tactics of squeezing the honest tax payers who are already in the net. The President said that the FBR has resorted to tactics similar to those adopted by Police, which is to pick up a person on Friday and releasing him on Monday after extortion of illegal gratification through coercion and harassment. FBR is doing exactly the same with business community by introducing draconian laws and forcing it to pay beyond their legitimate dues as well as to oblige the revenue officials.
Agar added that KCCI is of the view that the moves to introduce such large scale changes in taxation structures and fiscal policy measures for the year 201314 is the prerogative of next elected government and the legitimacy of these measures at this time is questionable. In case these measures are implemented, these will create grave problems and difficulties for the new government which will take a long time to review and reconsider the fiscal measures already implemented. To make changes to these measures will be an enormous task and will tarnish the image of new government at the very outset.
The President KCCI has also pointed out that, the FBR has already issued new directives and issued SRO’s to enhance the rates of Sales Tax, Withholding Tax and has given a free hand to the Officers of Inland Revenue to manually select cases for audit, issue demands and take actions against registered persons under various pretexts to generate more revenue to meet the targets for current financial year.
Through the controversial SRO 98I/2013. The FBR has made unwarranted and harsh changes in the Sales Tax Withholding Regime without consulting stake holders. Not only the rate of Sales Tax to be Withheld is increased from 1% to 1/5th of the applicable Sales Tax rate which effectively comes to 3.2%, but also all the companies and exporters regardless of the status whether individual or AOP have been made Sales Tax Withholding agent.
The KCCI through its recommendations has time and again suggested measures to broaden the tax net and bring the influential and powerful individuals having assets worth millions and vast unreported income into the tax net. But the authorities have failed to achieve these goals and instead continue to adopt tactics to harass the same set of tax payers and registered persons who have an excellent record of compliance.
The President has reiterated that KCCI and the business community as a whole would reject any budgetary measures for the next financial year which are implemented without taking all the stake holders on board and without consultation with apex bodies and trade associations.