Traders and Industries Urge Government to Withdraw Tax Proposals
Published on: June 16, 2024.
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Workers in the export sector have criticized the government’s proposal to bring the sector under the normal tax regime. At a press conference held by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), representatives voiced concerns about the potential disaster that could arise from burdening the struggling export sector with higher taxes. They highlighted the rising costs of production and tariffs on utilities as significant challenges faced by the sector.
The FPCCI also released a statement on the budget. It acknowledged the positive steps taken to enhance the IT sector and develop IT parks in Karachi and Islamabad. The introduction of an alternate dispute resolution system and incentives for the manufacturing of solar panels were also praised. However, the FPCCI expressed concerns about the ambitious revenue target set by the Federal Board of Revenue (FBR) and the large amount of funds allocated to servicing interest payments. They suggested devolving provincial subjects and reducing government expenditures to ease the fiscal space.
One of the notable changes in the budget proposal is that exporters will now have to pay normal income tax instead of the previous practice of a 1.0% withholding tax. The FPCCI believes this change will create hassle and discourage exporters, particularly affecting the SME and IT sectors. The budget also proposes the withdrawal of exemptions and reduced/fixed rates for specific goods and services, which the FPCCI argues will increase the cost of doing business and contribute to inflation. The statement also highlighted concerns about delays in sales tax refunds, the potential misuse of the provision relating to investigative audits, and the expansion of advance tax collection mechanisms to all sectors of the economy.
The FPCCI expressed opposition to the imposition of a 5.0% federal excise duty on commercial properties and the first sale of residential properties, which they believe will significantly increase housing and commercial sector costs. Additionally, they called for the reconsideration of aligning the default surcharge rate with the State Bank of Pakistan’s policy rate, as it would increase the default surcharge on taxpayers’ obligations.
Overall, the FPCCI’s statement highlights both positive and negative aspects of the budget, calling for specific measures to support the struggling export sector and address concerns about tax burdens and economic challenges.
Source: [The News](https://www.thenews.com.pk)
