Muhammad Saleem

Simplified tax laws can enable small and medium enterprises (SMEs) to strengthen Pakistan’s economy and create jobs for the youth.

Talking to WealthPK, Waheed Khaliq, Chairman of the Council of Loom Owners Association, said tax laws pose a persistent challenge to the business community, making it an uphill task to deal with the complicated documentation process. He pointed out that the Federal Board of Revenue (FBR) is still following a wrong direction although the government is striving to put the economy back on track.

“Instead of giving the much-needed lifeline to the business community, which is already struggling for survival due to high energy costs, the FBR officials prefer keep sending them notices. The FBR must strive to find new taxpayers rather than tightening the screw on those who are already keeping the national coffers full,” Khaliq said.

He urged the FBR to bring the trader class into the tax net, as they are currently paying a very small tax compared to salaried persons. By bringing traders into the tax net, the government can easily provide crucial help to the manufacturing sector, whether it's SMEs or large industrial units. He expressed hope that with a level playing field and a business-friendly environment, the government could boost the economy and create jobs to stamp out unemployment. 

He said a couple of weeks ago, Federal Finance Minister Muhammad Aurangzeb visited the Faisalabad Chamber of Commerce and Industry (FCCI), where the members emphasized that the FBR should focus on broadening the tax net, which could only happen if all the sectors were brought under the sales tax system. Ijaz Ahmed, an industrialist, told WealthPK that the SME sector is the economy’s backbone, contributing significantly to the GDP and providing jobs to countless skilled and unskilled workers.

He said like the large industries, SMEs are also crucial for poverty reduction, income generation, and job creation. He pointed out that large-scale industries could not immediately adapt to market changes; however, SMEs are flexible and could easily align with buyers’ demands. He stressed that SMEs have the potential to drive sustainable economic growth, if the government could remove bureaucratic hurdles and simplify tax laws.

“The SMEs often require legal assistance to file their tax returns. Owing to the complicated documentation, tax-evasion is surging. The government is making significant efforts to expand the tax net but it is impossible without simplifying the tax laws,” he added. Ahmed argued that simple tax laws will strengthen the economy.

Instead of drowning in paperwork, businessmen could focus on expanding their enterprises, ultimately leading to economic growth, he said. He said high tax rates and complicated procedures are putting SMEs in a difficult situation, prompting them to stay aloof and operate silently rather than actively contributing to the national exchequer.

Credit: INP-WealthPk