Wednesday, April 15, 2015 Serena Hotel, Faisalabad

Presented By :
Kashif Mateen Ansari
Wednesday, April 15, 2015
Serena Hotel, Faisalabad
President
ICMA Pakistan
 Pakistan



at a Glance
National and Social Issues
Corporate Issues
Economic Issues
 Global
 Budget
Standings
Considerations
Who can forget 16th December, 2014
Even our Children are not Safe
Trust Deficit
High Cost of
Doing Business
Ineffective
implementation
Enforcement of
rights and
contracts
Ineffective
Utilization of
Resources
Investment
Insecurity
Corruption
Lack of Research
& Development
Tax Evasion
Budget Deficit
Negative Balance
of Trade
Government
Spending
“My problem lies in reconciling my gross habits with my net
income.” — Errol Flynn
Alarming Social
Indicators
Energy
Crisis
Undocumented
Economy
Ineffective
Governance
Inconsistent
Government
Policies
Deteriorating
Law & Order
th
55
in 178
Countries
th
110
in 189
Countries
Factors
Standing
Total Countries
Institutions
123
148
Infrastructure
121
148
Macroeconomic environment
145
148
Health and primary education
128
148
Higher education and training
129
148
Goods market efficiency
103
148
Labor market efficiency
138
148
Financial market development
67
148
Technological readiness
118
148
Market size
30
148
Business sophistication
85
148
Innovation
77
148
Items
Standing in the
World (as on 2008)
Apricot
3rd
Buffalo Milk
2nd
Chickpea
3rd
Cotton, lint
4th
Cotton, Seed
3rd
Dates
5th
Mango
6th
Onion, dry
4th
Oranges
11th
Rice, paddy
11th
Sugarcane
5th
Tangeries, Orange,
Clementine
9th
Wheat
10th
Reserves
Standing
No. of
Countries
Statistics
Year
Oil Reserves
54th
96
2005
Natural Gas Reserves
28th
100
2007
Coal Reserves
15th
36
2008
Nuclear Power Generation Capacity
28th
31
2012
Electricity Production
31st
184
2007
Challenges
are like
this…
But we are
optimistic
and
hopeful …
What we
need to do …
Minimize the gap between ‘revenue’
and ‘expenditure’ by taking
measures to broaden the tax net.
This would help increase the tax to
GDP ratio.
Need to reduce the Trust Deficit so
that the People willingly fulfill their
Tax Obligations. The tax collection
services shall be accurate and based
on mutual trust and respect.
Repositioning of image of revenue
collection authority as partner in
country’s progress rather than agent
taking away the hard-earned money.
Enabling System for Taxpayers to pay
their Taxes.
No additional tax burden on existing
tax payers, especially corporate
sector. This would encourage
business activities and investment in
the country.
Bring the undocumented sector under
the tax net. This can be achieved by
reducing the cumbersome processes and
doing away with rampant corruption in
tax machinery.
Enhance the role of professional
institutions like ICMAP, who can
provide professional backbone for
the processes of good governance,
audit and review.
Increase the allocations for health,
education, housing and transport to
improve the quality and standard of
living of the common people.
In order to meet budgetary targets
we have resorted to oppressive
taxes, shifting incidence on the
poorer segments of society and
exempting the rich.
Adopt austerity measures and cut
down non-development
expenditures, without jeopardizing
the goals of economic growth.
A single ‘Business Registration
Authority’ may be established for
maintaining complete data base of
business entities.
An Independent statutory body may be
established to propose amendment in tax
laws. The amendments in tax laws should be
finalized a month before tabling the Finance
Bill in the parliament and disseminated for
comments from the stakeholders.
Regressive Taxation shall be avoided.
Since 1991, distortion in tax base
increased the burden of taxes on the
poor. By some estimations this figure is
38 percent whereas on the rich it stands
reduced by 18 percent.
[It is a system in which those with low incomes
pay proportionally higher taxes than the wealthy.]
Over reliance on indirect taxes has
contributed in pushing an
overwhelming majority of Pakistanis
towards the poverty line. Their
number is now more than 60 million.
This need to be fixed and adequately
addressed.
The Retail sector should be brought
under tax net by offering some
incentives. They may be required to
update stock daily and pay one
percent tax on all kinds of purchases.
FBR should impose tax on medium and
heavy transporters. As their income is
not verifiable, they should be charged a
fixed annual tax i.e. Rs. 10,000/ ‐ for
medium transporters and Rs. 15,000/ ‐
to 25,000/‐ for heavy transporters.
Keeping in view of high increase in
general price level, the basic tax
exemption limit for salaried class
persons be enhanced from present Rs.
400,000 to Rs.500,000 per annum (i.e.
Rs.41,666/‐ per month).
Salaried class may be allowed tax credits on
expenditure on education of their children
as well as tax credit on their actual
expenditure on account of utilities (i.e.
electricity, gas, telephone and water bills).
etc.
The government should consider to
provide tax holidays and incentives
to innovative and new industries,
especially those established in
undeveloped areas.
Provinces should also tax rich
landowners and collect tax on all
services but at a low rate of 5%.
Tax rebate to teachers and
researchers should be brought to
previous level of 75% in consonance
with government’ policy to promote
education and research.
Professional service providers, who by their
governing statutes, are not allowed to get
incorporated, should be excluded from
ambit of 'minimum tax' or they may be
allowed to carry forward such minimum tax
for next five tax years.
Currently, income tax exemption is
granted on export of IT related
services. Export of services by
professionals like engineers, architects
and accountants should also be exempt.
The current rate of 17% sales tax is
comparatively higher in region . It
should be brought down to single digit
and it should be non‐adjustable and
non‐refundable. This would help in
improving tax collection.
Sales tax should be collected at single stage
i.e. at import or manufacturing stage. In the
value‐added chain industry, GST should be
collected at 0.5% at each stage of value
addition to complete the chain. This would
help in the documentation of economy.
The authority to block bank accounts or
suspend or block sales tax registration/
NTN No. shall only be vested in Regional
Commissioners or DG, LTU and this
authority should not be allowed to be
delegated to any subordinate officer.
The Sales tax Act does not contain any provision
for allowing adjustment in respect of bad debts
after deposit of sales tax. It is suggested that
either special provisions be inserted to allow
such adjustments whenever it occurs or the
time limits for issuing of credit and debit note
be extended up to 365 days.
There should be a comprehensive list
of inadmissible goods and service in
the Sales Tax Act, 1990.
Find ways to handle
 Poverty
 Inequality
 Economic
 Justice
Growth
Rapid industrial and economic
growth and socio-economic justice
should be our main objectives. Tax
being a by-product will automatically
increase.
Before I Conclude, I would say …
According to O’Neill’s projections, Pakistan’s economy
would grow 15 times in the next 35 years or so to
become 18th largest economy of the world by 2050. We
shall take measures now to give a Prosperous Pakistan
to our coming Generations …