KARACHI: The Pakistan Business Council (PBC) has urged the government to implement a simple and predictable fiscal policy to encourage investment and wealth creation, generate sustainable tax revenues, jobs, exports, and reduce reliance on imports.

Making recommendations for the budget 2024-25 on Saturday, PBC Chief Executive Officer Ehsan Malik called for the separation of fiscal policy from tax collection to prevent the Federal Board of Revenue (FBR) from taking short-term revenue-seeking actions. He also urged strong alignment of fiscal policy with industrial, investment, and trade policies to provide a cohesive environment for growth.

On the government’s drive for privatisation, Malik asked for restoration of the letter and spirit of group taxation enacted in the Finance Act 2007-08 so that local groups can bid.

He urged the phasing out of super tax, which had effectively increased the corporate tax rate from 29pc to 39pc. With multiple taxes on intercorporate dividends, the effective tax rate on shareholders could amount to over 68pc.

PBC’s recommendations comprehensively addressed ways to broaden the tax base by infusing technology and fresh talent into a restructured FBR.

The PBC CEO called for a significant reduction in general sales tax on Point-of-Sale (PoS) integrated retailers to provide incentives for more to join.

Malik warned that if the tax burden on the salaried employees was not lowered, brain drain would see many people either leave the country or leave the formal sector for jobs in the informal sector.

Similarly, PBC called for the phasing out of Capital Value Tax, which resulted in a flight of local investors, with some surrendering their Pakistani nationality. It was unfortunate when Pakistan was trying to attract investors from abroad.

OICCI proposes steps for broadening tax net

Overseas Investors of Commerce and Industry (OICCI) has termed broadening the tax base and increasing revenue a key to any country’s development.

It urged the government to focus on this important issue instead of overburdening the existing taxpayers in the federal budget 2024-25.

“The tax-to-GDP ratio must be increased to at least 15 per cent of GDP. It is recommended that a major portion of FBR resources (IT, manpower, intelligence, data collection) be allocated towards broadening the tax base,” the OICCI said in its budget proposals on Saturday.

Published in Dawn, May 12th, 2024