KARACHI: The government’s decision to increase the tax rate is not the right solution for revenue enhancement, as it would only discourage the process of industrialization in the country, said Karachi Chamber of Commerce & Industry (KCCI) President Junaid Esmail Makda.
“The actual solution lies in broadening the tax net, which will not only bring down the tax rates but will also ensure the expansion of the business and industrial community,” said the KCCI president in a statement issued on Saturday. “It will also result in maximum production, excellent sales, enhanced revenue collection, employment generation, poverty alleviation and long-term economic prosperity.”
He alleged that the Federal Board of Revenue wants to achieve the revenue target “by further squeezing the existing taxpayers of Karachi” who are already contributing a mammoth sum of more than 70pc of the total revenue to the national exchequer.
Although the KCCI president appreciated the good intentions of Prime Minister Imran Khan regarding revenue collection, he criticised the FBR for not implementing the policies across the country and instead “confining its efforts to Karachi only”.
“We are not against actions being taken against the tax-evading residents of Karachi; they must be brought into the tax net along with tax evaders of other areas of the country. But the loyal taxpayers should not be harassed and overburdened with exorbitant taxes,” he maintained.
He said that the cost of doing business is already too high due to import/regulatory duties, upsurge in dollar rate and exorbitant taxes etc. while many industries are finding it hard to continue their activities. “Even those industries, which are somehow surviving, have no other option but to pass on the burden to consumers; resulting in across-the-board inflation.”
The KCCI president urged the government to follow the supply side of economics wherein taxes are reduced along with consumer prices that lead to quantum growth and appreciation in net revenue as well. He requested the prime minister to ensure that the relevant policies are implemented across the country in letter and spirit.
Makda reiterated that exorbitant tax rates along with cumbersome procedures and frequent issuance of anti-business and anti-taxpayers SROs/notifications would result in the closure of a number of industrial units, which would significantly dent the government’s revenue and render thousands jobless.
“We understand that the country is in dire need of additional revenue but one should realise that revenue must come from new sources and even if it is taken from old sources, it needs to be rationalised and kept at the lowest level in order to attract those who prefer to stay away from the tax net keeping in view the hardships being faced by loyal taxpayers.
“Heavy taxation has been imposed across the board and this additional burden has terribly affected the businesses and growth, which is already in a declining mode and may suffer more in the days to come,” he concluded.