KARACHI: Speakers at a pre-budget seminar organised by the Karachi Tax Bar Association (KTBA) on Tuesday stressed that standard sales tax rate must be slashed as it has been a stimulant for tax evasion, under-invoicing and smuggling.

They also stressed upon the need for broadening the tax net rather than squeezing existing taxpayers by using corrosive measures and intimidation.

The speakers suggested that the Federal Board of Revenue (FBR) should use electronic data for netting new taxpayers.

The seminar, presided over by Member (Legal) FBR Dr Tariq Masood, noted that stringent laws and high tax rates are causing leakages and retarding economic growth. A number of suggestions were also floated for the forthcoming budget 2018-19.

Presenting his paper on direct taxes, Muhammad Rehan Siddiqui stressed upon the need for broadening of tax net. He was critical about the income tax audit being carried out against salaried individuals and persons whose incomes fall under Final Tax Regime (FTR).

Mazhar Saleem Shah presenting his paper on indirect taxes noted standard sales tax rate of 17 per cent was too high and said it should not be more than 10pc.

He was of the opinion that since more than 70 per cent sales tax is collected from specified industrial segments like POL, power, natural gas, cement, cigarettes, fertiliser, beverages, sugar and processed food items, therefore, the reduction in sales tax rate may not have significant negative impact on revenue collection.

The current exemption threshold from taxes for cottage industry, he said, is very low owing to inflationary economy and recent devaluation of the rupee and government should enhance both the exemption limits appropriately to incentivise the cottage industry.

Published in Dawn, April 4th, 2018