The Karachi Chambers of Industry (KCCI) on Thursday decided not to submit budget proposals to the federal government to protest against the discretionary powers to the officials of Federal Board of Revenue (FBR) in the last four budgets.
In a letter to the federal government, the KCCI said, “Ishaq Dar is doing a great job as a finance minister but somehow FBR’s officials have been successful in acquiring these discretionary powers through the Finance Bill and even blocking the recommendations of Tariff Reform Commission (TRC) on the subject matter.”
The KCCI demanded to withdraw all the discretionary powers given to the FBR in the last four budgets which have proven to be counter-productive and tools to intimidate the Business and Industrial Community and has increased manifolds in corruption.
In the letter, it said that Karachi chamber being the largest chamber of the country and representing the Business and Industrial Community of Karachi whose participation in the economy/revenue of Pakistan is exceptional and undeniable, would like to bring to your kind notice that the chamber has been submitting budget proposals every year, which received due consideration in the past.
At that point in time, the decision makers, upon receiving our proposals, meticulously discussed the same with us and accordingly finalised the budget document which was not only in the national interest but also as per aspirations of Business and Industrial Community, the letter said.
The KCCI was never taken on board prior to finalising these budget documents on the contrary massive discretionary powers were entrusted to corrupt the FBR officials who used these powers to further twist arms and squeeze the existing registered taxpayers which is the basic reason why the overall tax base remains limited between 800,000 to 900,000 Income Taxpayers, and also the number of registered Sales Tax payers remains similar, the letter added.
Because of the wrong decision of the FBR, the members of Karachi Chamber are facing hardship due to widespread corruption and arm-twisting tactics by the FBR which has to be tackled by complete withdrawal of their discretionary powers so that an enabling business and industrial environment could be ensured for the progress of Pakistan.
This is the only way forward to enhance the revenue collection by attracting new taxpayers into the net.
These discretionary powers are as follows:
SALES TAX ACT 1990: (1) Section 37, sub-section (3); (2) Section 37A; (3) Section 37B; (4) Section 51; (5) Section3, sub-section–7; and (6) Section–3 (Sales Tax Scheme Chapter-II of Sales Tax Special procedure 2007).
INCOME TAX: (1) Powers to Enter and Search U/S 175(1) and (2); and (2) Powers to Obtain Information under Section 176 of the Income Tax Ordinance, 2001.
FEDERAL EXCISE DUTY: FED under Federal Excise Act, 2005, which causes dual and exorbitant taxations, has also proved to be very detrimental for numerous businesses so FED should be immediately phased out or drastically reduced after consultation with concerned stakeholders.