Traders alarmed over FBR's harsh taxation measures
22 February, 2013
KARACHI: Business community has been alarmed over the unusual actions by Federal Board of Revenue (FBR) out of established practices and under duress of the International Monetary Fund (IMF), aimed at imposing extra-ordinary taxation measures on the law-abiding taxpayers.
KARACHI: Business community has been alarmed over the unusual actions by Federal Board of Revenue (FBR) out of established practices and under duress of the International Monetary Fund (IMF), aimed at imposing extra-ordinary taxation measures on the law-abiding taxpayers.
The business and industrial community of the country was already burdened with high rates of sales tax, income tax and Customs duties said Haroon Agar President Karachi Chamber of Commerce and Industry (KCCI).
The FBR or the Ministry of Finance has not consulted with business community and apex bodies at any stage before adopting such drastic measures.
Agar said in a report published in some section of the press it has been said, “With only 25 days left before it's term ends, the government has finalised ambitious taxation proposals resulting in additional tax burden of Rs 461 billion mainly on the existing taxpayers while the proposed tax revenue target has been enhanced to Rs 2,651 billion”.
The report further adds these measures have been shared with Ministry of Finance and the IMF.
Chambers and business community all over Pakistan are in the process of preparing budgetary proposals and recommendations for the year 2013-14 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 2013-14 without taking the business community on board.
Clearly the FBR has failed to achieve the revenue targets for 2012-13 and has now attempted to shift the responsibility on existing taxpayers who are already over-burdened. 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 taxpayers who are already in the net.
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 said KCCI was of the view the moves to introduce such large scale changes in taxation structures and fiscal policy measures for the year 2013-14 was the prerogative of next elected government and the legitimacy of these measures at this time was 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.
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 98(I)/2013, FBR has made unwarranted and harsh changes in the sales tax Withholding regime without consulting stakeholders.
Not only the rate of sales tax to be withheld is increased from 1 percent 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.
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