FPCCI suggests key steps to achieve 6% growth in next two years

Shahnawaz AkhterWeb Editor

05th Jun, 2021. 06:58 pm
third-party tax audit

KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has suggested the government to reduce tax rates on the existing taxpayers and broaden the base to achieve 6 per cent GDP growth in the next two years, a statement said on Saturday.

Addressing a meeting to discuss the upcoming budget 2021/22, Mian Anjum Nisar, former president of the FPCCI and Chairman of the Businessmen Panel (BMP) said: “In view of pushing the GDP growth to 6 per cent in the next two years, the budget makers have to reduce tax rates and widen the tax base, curtail parallel economy, and also provide a competitive edge to Pakistan’s products in [the] global market.”

The annual budget is the best opportunity to address all the major issues of the country, he said, adding that the FPCCI has presented comprehensive proposals for the upcoming budget with the main focus on creating jobs by strengthening industrialisation in the country, broadening the tax base through lowering tax rates and introducing liberal policies to attract foreign investment.

During the last three decades, it was only twice when Pakistan’s economy grew by more than 5 per cent – first in 2003/06 and second during 2016/18.

Nisar said that realising the full potential of information technology can increase productivity for every industry. Pakistan has the potential to earn $36 billion through digital finance in the next four years, giving a 7 per cent boost to GDP and generating four million new jobs.

“The real fact is a lack of realisation that the world business patterns have changed and Pakistan has made no efforts to adjust to those realities,” he said, adding that if the country wants to have a higher growth rate, it would have to adopt innovative ways in the post-pandemic world as is being done by other countries, which are expecting a fast V-shaped recovery.

“We need to bring our digital infrastructure at par with other fast-developing countries, besides adopting new technologies and implementing e-government solutions,” he said.

Nisar proposed the economic managers to incentivise investors, broaden the tax net through documentation of the economy, simplify the tax system and take solid steps to reform the tax-collecting agency.

He expressed concern over excessively burdening the manufacturing sector that contributes more than 20 per cent to the economy, having a share of 70 per cent in tax payments.

He suggested the authorities to rationalise import tariffs, which is higher than any other competing country. Pakistan’s weighted average tariff rate differentials are among the highest in the world, causing a serious anti-export bias.

Nisar urged the government to take practical and concrete steps for the implementation of business-friendly policies, saying the skyrocketing prices of utilities such as electricity, gas and petroleum products were slowing down the economy.

There was a need to freeze the prices of those inputs for at least three years so that the economy could get the required jumpstart, he said.

He also suggested that the sales tax slab should immediately be curtailed in order to reduce the cost of production and inflationary pressures.

“The government has been urged to reduce the sales tax to a single-digit and also cut corporate tax to make the upcoming budget business-friendly,” he added.

A significant portion of the total budget should be allocated for hydropower projects. Reliance on costly thermal power has raised the cost of production and the import bill, as well. To tackle the energy shortages, maximum funds should be allocated for the construction of dams or water reservoirs, he stressed.

The BMP chairman said all income earners without exception of any sector should be registered with a national tax number.

“Tax authorities should ensure all NTN holders file annual income tax returns and wealth reconciliation statements,” he said.

The government should avoid announcing amnesty schemes to encourage honest taxpayers. The FPCCI’s former president stressed that the sales tax and income tax return forms should be made simple and standardised so that the taxpayers do not have to face the hassle of new tax return forms every year.

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