Ahmed Khan Malik

The industrial associations in Sindh propose that the government facilitate them by rationalizing taxes in the next budget. "Instead of raising the tax rates, rationalization of taxes is the prudent policy to support businesses as well as to raise revenue," representatives of the industries told WealthPK. Atif Rahmani, Secretary Nooriabad, Hyderabad Chamber of Commerce and Industry, said to foster a tax culture, communication channels such as Interactive Voice Response (IVR) scripts during phone calls, social/electronic/print media, radio channels, morning shows, campaigns, and roadshows should disseminate information about taxes and levies. He suggested the inclusion of tax knowledge in the curriculum for higher school education. Moreover, educational resources and workshops should be provided to the taxpayers to enhance their understanding of tax obligations and available incentives for compliance. Rather than burdening the businesses and taxpayers, he suggested offering tax credits or deductions to incentivize compliance.

Recognition programs or awards for consistent compliance can foster a culture of tax responsibility. "Additionally, tax incentives should be provided to the businesses that invest in sustainable practices or contribute to community development projects, linking tax compliance with corporate social responsibility. "Small businesses investing in employee training or job creation should receive tax credits or rebates, encouraging economic growth while promoting compliance. Active taxpayers should also receive preferential treatment in government services, such as separate counters at NADRA/passport offices," Atif said. To further expand the tax base, he recommended that the tax authorities leverage technology, data analytics (including artificial intelligence tools), and utilize databases such as "Nadra" and the "FBR Malomooat Portal." By doing so, all income earners can be ensured to pay their due taxes. Data from withholding statements, submitted by withholding agents (including banks and utility companies), property registrars, excise, and sales tax returns, should be used to broaden the tax base without burdening the existing compliant taxpayers.

President Korangi Association of Trade and Industry (KATI) in Karachi Johar Qandhari advocated for swift tax reforms and expansion of the tax net and recommended capping the income tax rate at a maximum of 15 percent and extending taxation to the agricultural sector under the normal tax regime. To combat inflation, KATI suggests reducing the interest rate to a single digit. Additionally, the proposals call for reducing corporate tax to 20% and implementing a withholding tax regime. To boost the real estate sector, KATI chief proposed reduction in the capital gains tax period from three years to one year. He also recommended the abolition of or refraining from auditing the minimum tax regime to improve the direct cash flow. Qandhari further outlined the need for a more efficient sales tax and value-added tax collection system, starting with an initial imposition of 5 percent sales tax. He hoped the federal government would incorporate stakeholder consultations into the budget preparation process, reduce the tax rate, and bring tax defaulters into the tax net. The proposals also stress the importance of increasing the production capacity and reducing the prices of electricity, gas, and energy. These measures, Qandhari argued, would spur industrialization and drive Pakistan toward economic development.

Credit: INP-WealthPk