KARACHI, April 10: Tax experts and consultants have asked the government to reduce tax burden on fixed income groups by bringing down tax rate from 35 to 25 per cent on salaried class.

Speakers at a pre-budget seminar 2003-04, organized by the Institute of Chartered Accountants of Pakistan (ICAP) on Wednesday evening at a local hotel, were unanimous in their view that the new budget should give relief to the fixed income groups.

A great concern was expressed over growing rate of poverty and unemployment in the country, and it was stressed upon to promote investment activity for rapid industrialization.

For achieving these goals, speakers also suggested some proposals and amendments in the Income Tax Ordinance 2001, and the Income Tax Rules 2002. There was general feeling that without removing irritants from such documents and reducing litigation the much needed investment would not come forth.

S.M. Shabbar Zaidi, who at length dealt with sales tax, said the economy was passing through a “tariff restructuring process”, and rationale for undertaking this process was understandable, however, it was time for stock-taking the underlying effects with special emphasis on the employment and alleviation of poverty.

He said under the ongoing structural changes in indirect taxes there was sustained growth in collection of sales tax, whereas revenue collection through customs and excise duties were declining year after year. Mr Shabbar said sales tax being a tax on consumption was judicious because it restricted the tax burden up to the level of consumption.

He stressed upon the need to reduce the sales tax from 15 per cent to 10 per cent, and be extended to many activities and services to further increase revenue collection. He said there must be rationale behind the reforms because high sales tax rate was contributing to inflation and increasing in poverty level e.g. sales tax on electricity.

On the other hand, Mr Shabbar pointed out that reduction in customs duty is exposing the local manufacturing sector to cheap goods being flooded from China and Dubai. Therefore, he urged that proper cascading of duties should be carried out to give reasonably required protection to the local industry.

If local industry is not allowed to sustain there would be further increase in unemployment. Without promoting viable local manufacturing sector, he said, the country could not give employment to its masses.

Another speaker Saqib Masood said the tax collectors had to change their attitude and their objective should be to only recover fair tax and not to collect tax at all cost.

He said appellate forums such as the CIT appeals should be separated from the tax administration and be put under judiciary. The complexity of tax laws, he maintained, is a major hindrance for taxpayers.

For promoting tax culture, Saqib Masood said it was necessary that there should be visible discrimination in treatment between taxpayers and tax evaders. Similarly, he said taxes should be instrumental for social change, environmental enforcement and research and development encouragement.

Regional commissioner of Income Tax, Corporate Region, Shahid Jamal, summing up the proceedings welcomed some of the suggestions put forward by the speakers.

Referring to a point raised by some members of the ICAP, he said there might be some genuine problems in not getting refunds, but having factual details of the figures his region last year (on collecting Rs34 billion) had paid Rs22 billion refunds to banks in bonds and Rs8 billion in cash refund, which meant that only Rs4 billion went to the national exchequer.

To another point, Mr Shahid said CIT appeals up to 80 per cent gave his ruling in favour of taxpayers, and to demand that this forum of appeal would give better performance if put under the Ministry of Justice held little ground.