ISLAMABAD, Dec 5: The Federal Board of Revenue (FBR) on Friday unveiled its proposed taxation measures marked with substantial withdrawal of exemptions in phases and bringing new areas under the tax net to be announced in the budget 2009-10.

Giving details of the new tax policy, FBR Chairman Ahmad Waqar informed the National Assembly Standing Committee on Finance and Revenue that the crux of the policy would be to make taxation system simpler, user-friendly and to identify non-taxpayers.

Under the policy, it has been estimated to raise the tax-to-GDP ratio to 15 per cent from the current around 9 per cent, which would translate into edging up the revenue collection to Rs2.5 trillion during the period under review.

He said that this target could only be achieved in case the policy is implemented in letter and spirit. However, he said rates of all federal taxes will be rationalised and maximum exemptions will be withdrawn in phases.

Mr Waqar said that the maximum customs duty will be scaled down from 125 per cent to 25 per cent. However, this reduction will not apply to the automobile sector and alcoholic beverages.

He said customs duty will be reduced to five per cent on all those machinery and plants, which were not manufactured locally.

The scope of the federal excise duty (FED) will be extended to more services. The rate of FED will also be rationalised and reduction of multiplicity in GST rates.

The chairman informed the committee that there will be a uniform corporate rate of 35 per cent. However, a special rate of 20 per cent will be introduced for small companies. He said that special tax rates for salary and non-salary taxpayers will be introduced, besides phasing out of income tax exemptions.

He said that FBR was bringing a change in the attitude of the general masses towards the tax culture so that people pay tax voluntarily instead of being forced to pay. The FBR has also introduced a taxpayer-friendly environment at all tax offices.

He attributed the low-tax-GDP ratio to weak enforcement, loopholes in tax collection and tax exemptions.

He highlighted measures being taken to improve the ratio, which include broadening and rationalising tax base, encouraging voluntary compliance, simplification of tax laws and improving efficiency.

The discretion of officers is being reduced to make the system more transparent.

The members of the NA committee observed that the existing tax culture was hindering the entrepreneurs instead of facilitating them and proposed to make drastic changes in the existing laws so as to make these growth- oriented.

The committee deliberated the amendments in the Companies (Appointment of legal Advisers) Act, 1974 and decided to continue the discussions during the next meeting.