‘Unilateral tax reforms prove ineffective’

In Business
April 07, 2024



KARACHI:

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Atif Ikram Sheikh has said that the FPCCI fully supports efforts to ramp up the tax-to-GDP ratio, which can be achieved through broadening the tax base and simplifying the taxation system, rather than further squeezing the already taxed people.

“The only pragmatic approach that can help to achieve the tax-to-GDP (gross domestic product) ratio of 15% in the next five years is to add 1.5 to 2 million new taxpayers to the tax net,” he stressed.

Sheikh was of the view that tax and Federal Board of Revenue (FBR) reforms should not be undertaken without consultation as such efforts had remained grossly unsuccessful many a time in the past.

“Successive governments have resorted to regressive and anti-business measures by further increasing taxes on the existing filers,” he pointed out.

Read FPCCI-SCC to collaborate

He called for adopting a three-pronged strategy to broaden the tax base: (i) end-to-end digitalisation of the taxation system to bring transparency and fairness (ii) FBR’s reforms in consultation with the business community in light of the ground realities (iii) an end to maladministration and harassment of the trade and industry at the hands of taxmen.

The business, trade and industry understood the need for the country to enter into a new, expanded and longer-term IMF programme, which would entail imposition of more taxes, he said but added that the FPCCI wanted to make it clear that the past few years had been unprecedentedly difficult for the trade and industry due to Covid-19, mammoth floods, high cost of doing business, exchange rate volatility and the increase in electricity, gas and petroleum prices.

Recently, the core inflation has come down to 12.8% and the headline inflation to 20.7% in March 2024, which is the lowest in 22 months, and the trajectory is showing a downward trend for future.

Therefore, he stressed, it was imperative to reduce the policy rate at the earliest as well as offer regionally competitive Export Finance Scheme (EFS) and Long-term Financing Facility (LTFF) to exporters.

Published in The Express Tribune, April 7th, 2024.

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