- Basic principles behind
budget-making process should be to improve macro economic stability, sharing of
tax burden by powerful elite and non taxed sectors, social protection and
keeping a deep sight of future challenges such as climate change, water crisis
- There is dire need
to widen tax regime instead of focusing more on current approach of reinforcing
rigorous taxation on existing tax payers. Over seven hundred thousand
out-of-tax net Pakistani elite who are evading taxes should be brought into tax
net which will contribute significantly into resource generation for country.
According to a recent estimate, over 700 billion rupees can be yielded through
widening of tax regime.
- Over 330 billion
rupees can be saved by addressing leakages and irregularities in public sector
- Every income should
be taxed and sectors such as agriculture, exports and high income services like
doctors, property dealers, and consultants should be brought under taxation. Currently no tax is payable on agricultural income
under the Income Tax Ordinance 2001. To
increase the percentage of GDP to tax, the said income should be taxable and
suitable constitutional amendment be made and the pertinent should be taxed
through current Finance Act.
- Pakistan has four types of tax rates for different tax payer’s
identities such as 35% tax rate for public private companies, 25% tax rate for
small enterprises, 25 % for association of persons and 7.5 to 25 % for
individuals. To provide healthy competition and level playing field it is
proposed that corporate tax rate to be reduced and at per with the rate of
other tax payers identities. It will
also encourage the tax payers to form companies and enter in to organized and
documented sector. Apart from the above
it is also pointed out that rate of 35% (going to increase to 37.5 % in budget
2011-12) on corporate sector is way too high as compared to other regional
countries. The prevailing rate is ranging between 15 to 30% in these
- Condition of NTN
Certificate should be imposed on every sale, purchase, transfer, gifts
mutation, integral, sale agreement and power attorney. Withholding tax at rate
of 6 (six) percent should also be imposed on all the above mode of
transactions. Transactions of plots of Societies such as DHA, Bahria Town,
Askari etc are being carried out by exchanging files and recording transfer of
plots without mentioning any value of such transactions. To cover these
transactions, value of such plots should also be bring at par with DC rates.
Further it should be mandatory for transfer of vehicles at any stage and
withholding tax at rate of 6 percent should also be imposed on locally
manufactured vehicle to bring it at par with that of imported vehicles.
- Existing sales tax
regime can produce the same results of RGST by emplacing reforms such as a uniform tax rate across the board
(currently 16 rates different rates exists), abolish all special procedures (currently
21 such items exists) and omit 3rd schedule (related to retail and is against
very principle of sales tax ) .
- Currently threshold
limit for deduction of tax is 25,000/- in a day and rate is 0.30%. To rationalized these provisions and
encourage citizen to abide and declare their banks, the exemption limit of
Rs.25,000/- be enhanced to Rs.100,000/- on the other hand rate of deduction of
tax to be enhanced from 0.30% to 0.5%.
- Emphasis should be
on rationalization of different taxes while ending double taxation.
- Section 177 of
Finance Act, 2010 gives vast unconditional discretionary powers to the
Commissioner at the field formation level without any restrictions to call for
the records etc, and conduct audit of the income tax affairs of any person or
class of persons. This is against the
norms of taxation and subject to misuse and harassment of the taxpayers. It is
imperative that such powers need to be regulated for judicious use in a manner
that reduces the discretion and at the same time facilitates the smooth
operation of audit.
recommendations were presented by speakers mentioned below at a recent seminar /panel
discussion held at SDPI, Islamabad.
the Event: Forthcoming budget 2011-12:
opportunities and challenges
Collaboration: ActionAid Pakistan.
Monday: May 23, 2011
- Dr Syed Nazre Hyder,
Senior Economic Advisor, SDPI
- Dr. Pervez Tahir,
Former Chief Economist, Planning Commission of Pakistan
- Mr. Sakib Sherani,
Former Principle Economic Advisor, Ministry of Finance
- Dr. Athar Maqsood
Ahmed, Head of economics department at National University of Science and
- Mukhtar Ahmad Ali,
Executive Director, Centre for Peace and Development Initiatives (CPDI)
- Hafiz M.
Idrees of Income Tax Bar Association, Rawalpindi