CBR chief for removal of ST on cotton: Import stage
By Our Staff Reporter
KARACHI, July 19: The chairman, Central Board of Revenue (CBR), Muhammad Abdullah Yusuf on Monday admitted that the sales tax on cotton at import stage was an anomaly which should be removed.
Addressing the board of directors of Karachi Cotton Association (KCA), the CBR chairman said that since sales tax on cotton had been removed, therefore, it should be done away with at the import stage as well.
However, he said the issue should be put before the Anomaly Committee so that appropriate measures could be taken in this regard. The CBR chairman while giving details about the reforms being undertaken for improvement in the revenue collection at different levels, was fully conversant with the fact that sales tax system was not only defective but also corrupt in its present form and nature.
Nevertheless, he said that reforms agenda was being carried out and it would need some time before real changes start coming out. "There will be a sea change when the entire reform agenda was completed by the year 2007," he added.
The CBR chief was quick to say that visible change would start emerging from December 2005 when most of the transformation would be completed. Whereas cotton and its products are the highest contributor in revenue and exports, it was also the highest claimant of sales tax refunds.
Muhammad Abdullah Yusuf said last year the CBR in total gave Rs52 billion towards sales tax refund out of this Rs35 billion were claimed by textile sector. The payment towards duty drawback was other than this amount, he added.
He assured that there would be gradual removal of sales tax from other sector of cotton economy as was done in case of cotton which reduced the burden on spinners. Under second phase, he said, similar treatment would be given to other sectors of cotton.
The objective of reforms in the CBR and revenue collection was to create enabling environments aimed at accelerating the process of growth and increasing investment in the country.
He said the last year's GDP growth stood at 6.4 per cent and for this year it is 6.6 per cent but for next 2 to 3 years the target is 6.8 per cent. This could only be achieved, he said if there was consistent growth which was badly needed to address problems like poverty and unemployment.
Recognizing the issue, he said the government had undertaken the task of restructuring and revamping the CBR, which started from 2001. However, Abdullah Yusuf said it was a long drawn-up plan which would go up to 2007.
There were reforms in income tax sector where last year Universal Self Assessment Scheme (USAS) was introduced. Most of the reforms in income tax were based on voluntary compliance and barring 4 to 5 per cent all the returns were considered to be as assessment orders.
He agreed that there is a culture of mis-trust between revenue collectors and taxpayers due to which little more than one million taxpayers were presently registered all over the country.
Similarly, he said, the concept of Large Taxpayers Unit (LTU) was launched in Karachi and in next three month a new LTU would be opened at Lahore where presently Medium Taxpayers Unit was working.
The CBR chairman said five more LTUs in other cities would soon start functioning besides one LTU in Islamabad. He said regional tax offices would be opened up in small towns, which would cater to the need of Sales Tax, Income Tax and CED.
He expressed the hope that all these reforms and changes would induce tax culture in the country which so far had been hesitant and lagging far behind compared to other countries of the region.
Similarly, Mohammad Abdullah Yusuf said, at customs a reforms agenda under Customs Administrative Reforms (CARe) was already under way. The CARe, which was electronically automated system will allow the import to process his Bill of Lading ahead of the arrival of a vessel.
In order to meet the growing global challenges and keep country's exports clear from security hazards, he said, scanners were soon going to be functional at all ports of the country. There would be random scanning of containers and a nominal fee would be charged from the exporter for the services.
With regard to Sales Tax, he said a lot more improvement was needed because menace such as flying and fake invoices are looting the exchequer on one hand and depriving the genuine exporters from their much needed funds on the other.
