Karachi, May 6 (IANS): The Pakistan Business Council (PBC) on Wednesday expressed concern over an increase in the tax collection targets being set by the government for the upcoming fiscal year.
The PBC said that new taxes amounting to Rs 800 billion would have to be imposed in the upcoming budget to meet the revenue targets set by the International Monetary Fund (IMF), geo news reported.
The council, in a statement, said that the new taxes would strangle the economy already reeling under the impact of the novel coronavirus. "The economy has to be improved further for the upcoming fiscal year in the wake of the crisis," the council said.
The council noted that it had always highlighted the need for reforms at the Federal Board of Revenue. "Before revision in the taxation targets, reforms at FBR should be considered," it said. "IMF has indicated that interest rate should be kept at 11 per cent," it added.
The council said that the FBR lacked the capacity necessary to increase the tax base of the country. "A 34 per cent increase in taxes for the upcoming fiscal year is unrealistic," it said. "IMF has estimated inflation to be around 8 per cent in the upcoming fiscal year," the council added.
The FBR is mulling restoration of zero-rated sales tax regime from the next fiscal year as businesses press the authorities for ways to rid them of liquidity constraints on stuck refunds, The News reported.
The FBR received budget proposals from the business community and the majority of the chambers and associations and textile manufacturers demanded restoration of sales tax zero-rating from July 1, 2020.
The government abolished the sales tax zero-rated facility in the last budget after identifying massive misuse. Therefore, the zero-rated sales tax was withdrawn from July 1, 2019 and a normal rate of 17 per cent imposed.
The Pakistan Business Council also supported revival of zero-rated facility for five export-oriented sectors. The PBC said exporters have taken a strong negative hit from the two-edged sword.
It added that zero-rating regime was abolished, resulting in piling up of sales tax refunds. There was also cancellation of existing orders due to the Covid-19 pandemic.
Restoration of the zero-rated facility will allow some relief on the liquidity front for the major export sectors, the PBC said in its budget proposals.