ISLAMABAD: The government is considering imposing in the 2012-13 budget minimal taxes on products, raw materials and machinery that are currently being imported without duty, thus doing away with protection provided to some industries flourishing at the cost of consumers.
Talking to Dawn on Sunday, a senior official said: “The new approach has been evolved following the observation that past taxation policies have failed to raise the tax-to-GDP ratio, which fell to 8.2 per cent this year from 9.8 per cent last year.”
The official said the budget-makers had proposed that the zero per cent slab on all products, raw materials and machinery be abolished to raise duty and taxes for the government.
This year, 76 per cent of the imported products entered the country without duty, said the official. “This is a major concern for the budget-makers.”
The total goods imported during the July-March period were worth $33.285 billion, making a strong case for imposing taxes on all imports.
FBR chairman Mumtaz Haider Rizvi has hinted at reducing the customs duty to 25 per cent from 35 per cent in the budget.
The regulatory duties were introduced in 2008 to curtail import of luxury items, which led to multiple customs tariffs.
The official said the government is also considering reducing customs duty across the board for all taxpayers. “No discrimination will be made between commercial importers and industrialists,” he said.
“The government is considering slashing exemption limit to 90 days from the existing 12 months to reduce the misuse of the Duty and Tax Remission for Export (DTRE) scheme by exporters.”
According to him, the FBR has worked out commodity profiles of various sectors like sugar, cement and cigarette to plug tax evasion. “Various stakeholders have approached the FBR to reduce general sales tax rates from 16 per cent to a single digit,” he said.
The higher GST rates have led to illegal payments of input tax adjustment to unscrupulous people, which has crossed the figure of Rs50 billion. The reduction in GST rate, which is the highest in the region, will lead to payment of input tax adjustments.