Lahore, June 06, 2017 (PPI-OT):There is a dire need to maintain balance between revenues and expenditures as budget deficit forces the government to depend on borrowing that eats up major part of Federal Budget. Tax and structural reforms and broadening of tax net are the most appropriate solutions to this issue.
These views were expressed by the experts from trade, industry and academia while speaking at a brainstorming Post Budget Seminar 2017-18, jointly organize by the LCCI and Institute of Cost and Management Accountants of Pakistan (ICMA), here at the Lahore Chamber of Commerce and Industry. The LCCI President Abdul Basit, Senior Vice President Amjad Ali Jawa, Awais Yasin, Abdul Razzaq, Asim Zulfiqar, Saeed A. Sheikh, Dr. Nadia Tahir, Zia Mustafa Awan and Qamar Uz Zaman were prominent among the others.
The experts said that businesses require incentives and facilitation for growth. Industries in Pakistan are facing multifarious challenges include stiff competition from the regional countries, power outages and stability in economic conditions. But the major bottleneck is unfriendly taxation system. They said that industry contributes 76 per cent to the tax revenues while agriculture contributes only 2 percent and the rest is from services sector.
They said that according to the latest tax directory, the number of personal income taxpayers has increased from 752,695 in 2000 to over 1,074,418 in 2015 but it remains small compared to 40 million people employed outside the agriculture sector. Similarly, the number of active cooperate income tax (CIT) filers is 27,334 out of more than 60,000 companies registered for CIT and a mere 0.8 percent of the number of commercial/industrial electricity users. With regards to the sales tax regime, the number of entities registered for the GST is 178,190 out of about 1.4 million retailers and 3.4 million commercial and industrial electricity users.
The experts further said that revenue collection is highly centralized with the Federal Government collecting over 92 percent of total tax revenues, with provincial governments own revenues contributing the remaining 7.7 percent. There has been a big increase in the share of withholding taxes in the income tax regime from 48.7 percent in 2006-07 to 68 percent in 2015-16. Within withholding taxes, levies on exports and imports, contracts, salary, cash withdrawal and telephone and electricity bills are likely to be more regressive in nature. Whereas, contracts, imports and salary contribute 59.1 percent in withholding taxes FY 2015-16.
The LCCI President Abdul Basit said that the share of direct taxes is not increasing in the federal and provincial tax systems. The share was 38 percent in 2007-08 and in 2015-16, it has marginally increased and contributed 38.34 percent. He said that it is imperative to take special measures that will facilitate business and restore the confidence of local businessmen by announcing relief measures for the businessmen.
Abdul Basit said that though energy and infrastructure development has been focused in the Federal Budget 2017-18 few other sectors need immediate attention of the government. He said that decline in exports is a bad sign therefore export-oriented industry should be given maximum facilities. He said that food sector should also be given zero-rated facility to get due share in the international halal food trade. He said that Kalabagh Dam is entirely neglected in the Federal Budget 2017-18. He said that this mega project should be built at any cost as it would give benefits of billions of dollar to the economy.
For more information, contact:
Lahore Chamber of Commerce and Industry (LCCI)
Lahore -54000, Pakistan