Government is going to facilitate manufacturing further in order to provide enough space to industrial units to become more productive

Mar 27 - Apr 02, 2006

Muhammad Abdullah Yusuf, Chairman CBR has categorically declared that the government has no intention to impose Sales Tax again on Five Zero-Rated Export Sectors in the next budget.

There is no such intention of the government and the entire chain of five exports oriented industries including textiles; leather, surgical, sports goods and carpets would continue to enjoy the exemption from Sales Tax.

Addressing the industrialists at SITE Association office, Abdullah Yusuf observed that this step was taken to minimize fraud as the amounts of refunds used to exceed the collection amounts and also to improve the cash-flow situation of the manufacturers, and to avoid the legacy of cumbersome system of refunds and rebates.

In addition to that the government is going to facilitate manufacturing further in order to provide enough space to industrial units to become more productive, he said.

Chairman CBR appreciated the role of business community in improving the national economy. Referring to the attitude of tax collecting agencies he said that the business community, who are the customers of CBR, would now find them friendlier as there has been an attitude change.

Ameen Bandukda, chairman SITE Association in his address said that despite all efforts made by CBR in the resent past, the number of total tax payers in Pakistan has not been able to go beyond 1.5 million taxpayers, who were being squeezed for the past so many years.

Bandukda stated that income wherever generated and from whatever source should be taxed. When there is a level playing field, people will feel proud of paying their taxes. Instead of feeling of pride in paying taxes in Pakistan there is instead a feeling resentment here, as the tax system does not appear to be equitable and socially just to all segments.

He said that according to the economists there should be at least three million taxpayers in the country and the low numbers of taxpayers had meant that the government had increasingly been relying on indirect taxes to raise revenues to meet their expenditures. The incidence of indirect tax falls on the poor segment of our society and fuels inflation. He said that the present government needed to further reduce the direct tax rates and increase the tax base. He suggested that every new commercial entity be it a retail / store or a doctor's office or a workshop, should first take an NTN before being allowed to get any utility connection.

Abdullah Yusuf said that the Government is reviewing the entire taxation system and looking for areas in need of rationalization. He agreed and said that his first priority is to increase the tax base other wise the existing 1.5 million taxpayers in a population of 150 million, would continue to be squeezed. He urged the business community to come forward and help the government in increasing the tax base. He said they are working on revolutionary changes in increasing the tax base by enrolling more and more potential taxpayers from every sector.

Talking about the mounting inflation and its repercussions on the general public Abdullah Yusuf attributed it to substantial increase in prices of petroleum products, food items and rental value and said that it is among one of the major problems facing the government today. While admitting that Inflation had gone over 11 % it has now come down to just over 8 %. He said that he would like to see inflation coming down to the level of 5 %.

Discussing the changes in income and corporate taxes and reforms in tax administration Abdullah Yusuf said that these had brought about effective changes and were welcomed by all the stakeholders. He said that in Pakistan the tax to GDP ratio in comparison to other developing countries is very low and hoped that this would gradually improve as the economy was growing.

Throwing light on the imbalance in Import and Export which would give rise to a huge trade deficit this year, Chairman CBR mentioned that this was due to the rising cost of petroleum internationally, growth of the telecom sector in Pakistan and increase in imports of automobiles, food items along with raw materials and machinery.

Discussing the delay in sales tax refund cases, Chairman CBR said that the disputes are being resolved with speed and the stakeholders are getting refunds where the documentations are in order.

Earlier, Ameen Bandukda, Chairman, SITE Association of Industry welcoming the Chairman CBR, Muhammad Abdullah Yusuf said that he is a very dynamic person and is the man responsible for making revolutionary changes and had been instrumental in zero rating sales tax on five export oriented industries in the last fiscal budget. In his speech he touched upon the issues mainly related with the current macro economic situation of Pakistan and showed concern that GDP growth in Pakistan will fall this year to about 6% compared to the impressive growth of 8.4% last year.

Expressing his views, Siraj Kassam Teli, Patron in Chief of SITE Association, said that the business community is always with the government and said that the present proof of it is the increasing export figure, which never crossed 10 billion a couple of years back would now be around 17 to 18 billion dollars. He suggested the Chairman CBR to utilize the data collected by CBR on the directives of Gen. Pervez Musharraf at the initial stage with certain modifications to increase the tax net base in the country instead of unproductive exercise in this direction. He also demanded city/provincial wise data pertaining to tax collection so that it could be ascertained that how much tax Karachiites are paying.