Wednesday May 06, 2020
KARACHI: The Pakistan Business Council (PBC) on Wednesday expressed concern over an increase in the tax collection targets being set by the government for the upcoming fiscal year.
PBC said that new taxes worth a total of Rs800 billion would have to be imposed in the upcoming budget to meet the revenue targets set by the International Monetary Fund (IMF).
The council, in a statement, said that the new taxes would strangle the economy already reeling under the impact of the novel coronavirus. "The economy has to be improved further for the upcoming fiscal year in the wake of the crisis," the council said.
The council noted that it had always highlighted the need for reforms at the Federal Board of Revenue. "Before revision in the taxation targets, reforms at FBR should be considered," it said. "IMF has indicated that interest rate should be kept at 11%," it added.
The council further said that the FBR lacked the capacity necessary to increase the tax base of the country. "A 34% increase in taxes for the upcoming fiscal year is unrealistic," it said. "IMF has estimated inflation to be around 8% in the upcoming fiscal year," the council added.
FBR is mulling restoration of zero-rated sales tax regime from the next fiscal year as businesses press the authorities for ways to get them rid of liquidity constraints on stuck refunds, The News reported on Wednesday.
FBR received budget proposals from business community and majority of the chambers and associations and textile manufacturers demanded restoration of sales tax zero-rating from July 1, 2020.
The government abolished the sales tax zero-rated facility in the last budget after identifying massive misuse. Therefore, the zero-rated sales tax was withdrawn from July 1, 2019 and normal rate of 17% imposed.
Pakistan Business Council (PBC) also supported revival of zero-rated facility for five export-oriented sectors. The PBC said exporters have taken a strong negative hit from the two-edged sword.
It added that zero-rating regime was abolished, resulting in piling of sales tax refunds and there was cancellation of existing orders due to the COVID-19 pandemic.
Restoration of zero-rated facility will allow some relief on the liquidity front for the major export sectors, the PBC said in its budget proposals.