Govt to get stakeholders on board to finalise budgetJune 18, 2013
KARACHI: All budgetary measures announced in the federal budget 201314 come under dispute would be examined and taken to the national assembly for the debate.
This was stated by Chief Commissioner RTO, Khawaja Tanveer Ahmed, here on Tuesday. Speaking as chief guest at the postbudget seminar of Karachi Tax Bar Association KTBA, Chief Commissioner said that government is trying to get all the stakeholders on board to discuss the Budget and if there is any recommendation helpful, it would be considered.
While appreciating the role of KTBA for organizing experts’ seminars on budget, He said that government always finds them extremely helpful in finalizing the budgetary measures and if they get approved by the parliament they become part of law. He declared that KTBA’s recommendations and suggested reforms are the most helpful tools for the government and FBR. He said that KTBA also provides guidance to the taxmen and suggests getting on right direction.
Earlier, President KTBA, Haider Ali Patel in his welcome address pointed out that 0.5% levy on the net moveable asset on an individual on an annualize basis would be detrimental as it mean that the assets generated by individual out of tax income would be repeatedly tax if the funds are kept in the shape of securities, investments or cash. He termed this measure as a blow to generations of savings which is already very low in our economy. On the direct tax side he pointed out that proposal to introduce the requirement for the Commissioner’s approval in writing for revising the income tax return is unwarranted feared that the revision of return will require the taxpayer the same hardship they are currently facing in revising a sales tax return.
He further stated that the proposal to disturb the criteria to allow an Inland Revenue Officer with 15 years of service in basic scale of 17 and above who happens to be a law graduate to be appointed as judicial member is totally uncalled for and unjustified as a law degree holder cannot be equivalent to the experience of a District Judge or an advocate of a
practicing High Court advocate and would vehemently urge the Federal Government to immediately withdraw this proposal. On the proposals to broaden the tax net he termed them as positive step to broaden the tax net however, he emphasized what is now required is affective follow-up and enforcement by the FBR so that the amendments generate meaningful result and are not left merely in the books of law. He appreciated the proposal to withdraw section 120A as Amnesty Schemes are a major hurdle in widening the tax net and declaration of true income.
Prominent Tax Expert Abdul Qadir Memon, speaking on changes in direct taxes in his speech stated that the Finance Bill has proposed to enlarge the Withholding tax regime, which would require not only Government’s will but very effective monitoring and enforcement by the FBR. Moreover, the enhancement of rate of tax on salaried income and withdrawal of right to
adjust tax withheld and tax rebates, would hit hard to the most bonafide taxpaying class. The Government instead of making clear difference between the taxpayer and nontax payer has proposed different rate of tax for corporate and no corporate Sectors, which will distort the concept to provide level playing field to the taxpayers, conducting the same business.
Another expert Adnan Mufti said in his presentation increase in rate of sales tax by 1% would have a multiplier effect on the economy and the inflation would grow by almost 25 – 30%. Increase in the rate is not the solution, as we all know that Sales Tax being regressive in nature would directly hit a common person who at present is living beyond his means. He further pointed out that levy of Sales Tax on essential items like Milk prepared by replacing one or more constituents Tetra Pack Milk will hike the inflation by at least Rs. 13/ to Rs. 15/ per liter will be another blow to the poor and middle class.
He said that actual problem that needs to be looked into as to how the Sales Tax base can be increased, how tax fraud could be avoided and how fake refunds could be stopped as it is imperative to realize that all these things could only happened in collusion. He also criticized the move to re introduce concepts that were tested previously and were abolished being ineffective and impracticable.
Examples of those are Sales Tax on Advance Payment and further tax on unregistered persons. Former President KTBA, Masoud Ali Naqvi, gave an overall review of the impact of the budgetary measures on the economy as a whole and stated that with the wide ranging increase in impact of indirect taxes, inflation was set to rise and May cross the estimates suggested by the government.