March 22, 2003	Saturday	Muharram 18, 1424

KARACHI, March 21: The President, Karachi Chamber of Commerce and Industry (KCCI), Mian Nasser Hyatt Maggo, has urged the government to evolve mechanism in new budget for containing prices of petrol and electricity in order to avoid their recurring adverse impact on the cost of production and prices.

Addressing the pre-budget seminar 2003-04, organized by the KCCI on Friday at a local hotel, he said the budget should also focus on evolving some fiscal and physical measures to combat the menace of smuggling.

He said that discretionary and arbitrary powers of the tax collectors be curtailed and ultimately be removed. The tax laws must be simplified to become understandable to common man.

He also called for removal of flaws in duty and tax remission for export (DTRE) rules. The export sector must only be treated as a source of foreign exchange earning and certainly not as a tool of revenue mobilization.

Chairman Taxation Sub-Committee, KCCI, Saqib Naseem, in his paper, urged the government to broaden the tax base on agriculture which contributes about one fourth of the GDP and enjoys exemption from income tax. He said duties and taxes on industrial machineries not manufactured locally be abolished and all primary raw materials not locally produced be allowed to import at zero rate of duty to safeguard local industry.

Abdul Qadir Memon, consultant on income tax and company law, also said that the agriculture income should be brought into tax net as the trade, industry and salaried class share almost entire income tax collection of Rs125 billion.

He said it was a global practice fiscal laws were amended prospectively so that contracts and agreements already concluded were not affected. The government should also practice such norms here in order to enhance the credibility of the government and to attract more investment.

He said that all categories of taxpayers like petroleum dealers, whose incomes were difficult to determine accurately be brought into presumptive tax regime. He also urged the government to reduce the withholding tax which had been rising from 1995 and currently it was six per cent of the import value. He said the withholding tax should be charged on C&F value instead of import value.

Shahid Ahmed Khan of Lakson Tobacco Company, while presenting his paper on sales tax and central excise duty, said currently 190 items were levied at 20 per cent sales tax as compared to existing rates of 15 and 18 per cent. It should be reduced to increase the tax base. On excise duty, he said the excise act should provide a provision for input adjustment on final product and all excise duty paid on materials used for producing excisable goods should be adjusted as an input tax.