Karachi : In view of pushing the GDP growth to 6 percent in next two years the budget makers have to reduce tax rates to widen the tax base and curtail parallel economy, also providing a competitive edge to Pakistan’s products in global markets.Addressing a meeting held here today to discuss the upcoming budget 2021-22, the Federation of Pakistan Chambers of Commerce & Industry’s Businessmen Panel Chairman Mian Anjum Nisar said that the annual budget is the best opportunity to address all major issues of the country.
Mian Anjum Nisar said that the FPCCI has presented comprehensive proposals for the federal budget 2021-22 with main focus on creating jobs by strengthening industrialization in the country, broadening of tax base through lowering tax rate and introducing liberal policies to attract foreign investment. He appreciated the FPCCI and BMP’s other leadership for compiling the sector-specific budget proposals in a balanced manner.
He said that during the last three decades, it was only twice when Pakistan’s economy grew by more than 5 percent –first in 2003-2006 and second during 2016-2018. He said that realizing the full potential of information technology can increase productivity for every industry. He observed that the digital finance potential of Pakistan could be $36 billion in next four years, giving a 7 percent boost to the GDP and generating 4 million new jobs.
The real fact is a lack of realization that the world business patterns have changed and Pakistan has made no efforts to adjust to those realities. If the country wants to have a higher growth rate, it would have to adopt new innovative ways in the post-pandemic world as is being done by other countries, which are expecting a fast V-shaped recovery. We need to bring our digital infrastructure at par with other fast developing countries, besides adopting new technologies and implementing e-government solutions.
The Businessmen Panel chairman proposed the economic managers to incentivize investors, broaden tax net through documentation of economy, simplify tax system and take solid step reform the tax collecting agency. He expressed serious concern over excessively burdening the manufacturing sector that contributes more than 20 percent to the economy, having a share of 70 percent in tax payments. He suggested the authorities to rationalize import tariff, which is unlike any other competing country. Pakistan’s weighted average tariff rate differentials are among the highest in the world, causing a serious anti-export bias.
Mian Anjum Nisar urged the government to take practical and concrete steps for the implementation of business-friendly policies, saying the sky-rocketing prices of utilities like electricity, gas and petroleum products were slowing down the wheel of economy. He added there was a need to freeze the prices of that inputs for at least three years so that the economy could get required jumpstart.
He also suggested that the sales tax slab should immediately be curtailed in order to reduce cost of production and inflationary pressures. “The FPCCI and Businessmen Panel urge the government to reduce sales tax to single digit and also cut corporate tax to make the upcoming budget business-friendly,” he added.
A significant portion of the total budget should be allocated for Hydro power projects, he stressed. Reliance on costly thermal power has raised the cost of production and the import bill as well. In order to tackle the energy shortages, maximum funds should be allocated for construction of dams or water reservoirs. The country is in dire need of an urgent shift in its energy-mix in favor of Hydro power and local fuels, he added.
Mian Anjum Nisar pointed out that all income earners without exception of any sector should be registered with national tax number. Tax authorities should ensure all NTN holders file annual income tax returns and wealth reconciliation statements. The government should avoid announcing amnesty schemes to encourage the honest taxpayers.
FPCCI former president stressed that the sales tax and income tax return forms should be made simple and standardized so that taxpayers do not have to face the hassle of new tax return forms every year.