Karachi: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged the government to reduce sales tax to single digits and also cut corporate tax to make the upcoming budget business-friendly.
Unveiling budget proposals on Thursday at the Federation House, FPCCI President Mian Mohammad Adrees said that nothing short of visionary approach and drastic steps can revive the economy, which he said should grow by at least 7pc annually for visible impact.
The FPCCI advocated the need to raise the country’s tax base so that tax-to-GDP ratio improves from current 9pc. The ratio was 12-13pc in the 80s and 90s, he said.
He added that the proposals had input from all member bodies, including chambers and associations, across the country, and that no proposal clashed with the IMF and World Bank conditions or the goal of increasing revenue collection.
There is a demand to chop the corporate tax rate by 2 percentage points annually to bring it down to 25pc over the next four years from the current rate of 33pc. The individual income tax exemption should be raised from Rs400,000 to Rs600,000.
All incomes including agriculture should be taxed. It has been stressed that the sales tax and income tax return forms should be made simple and standardised so that taxpayers do not have to face the hassle of new tax return forms on an annual basis.
The FPCCI believes that sales tax should be non-adjustable and non-refundable and be collected at single stage at import or manufacturing. In value-added chain industry, GST should be collected at 0.5pc on each stage of value-addition to complete the chain.
It has been urged that payment of outstanding sales tax refunds, which presently stands at Rs110 billion, should be disposed of as soon as possible because this was causing liquidity crunch to exporters, hurting exports.
A single ‘business registration authority’ should be established to maintain complete database of business entities. The FPCCI strongly recommended that Saturday be declared as a working day to minimise the economic woes.
Dr Mirza Ikhtiar Baig, who is a member of the FPCCI’s budget committee, disclosed that the government has agreed to impose Gas Infrastructure Development Surcharge (GIDS) from July 1.
