ISLAMABAD: Aftab Ahmed, Chief Commissioner, Internal Revenue, Regional Tax Office, said here on Saturday that previous experiences have shown that despite lowering of the tax rate, there had been no major increase in revenue collection.

Speaking at a pre-budget seminar, the tax official ruled out the idea that cut in the tax rate would correspondingly improve revenue collection.

He asserted that the rates need not be lowered in any manner.

“There is need to improve compliance and expand the tax base for increasing tax collection,” he added.

Frequent issuance of the SROs was not only damaging the tax machinery, but also affecting tax system.

He, however, admitted flaws in the tax collection mechanism, and said that there was a need to enhance the use of IT and electronic filing of returns.

“IT can change concepts of taxpayers by reducing their direct interaction between taxpayers and tax department.”

Mr Ahmed said: “There is an issue with the tax laws which can only be amended at the time of budget through Finance Act.”

He said that the tax policy must be driven by direct taxes, but indirect taxes get more share in overall revenue collection as every citizen contributes to indirect taxes in one way or another.

The seminar was organised by Association of Chartered Certified Accountants (ACCA) Pakistan in collaboration with Islamabad Chamber of Commerce and Industry (ICCI).

ICCI President Zafar Bakhtawari said tax collection has significantly increased from Rs400bn in 2002 to around Rs1,900bn in 2012, but unfortunately businessmen were still being blamed that they were not paying due taxes.

He said that revenue collection has also increased due to encouragement of self-assessment schemes introduced by the FBR.

“There was a need to manage expenditures too,” he said adding, “Our budgetary expenditures were around Rs3,000bn and a huge amount of Rs1,100bn was for debt servicing which needs to be managed more efficiently.”

Mr Bakhtawari suggested that the next fiscal budget should take emergency measures to deal with the curial issue of load-shedding in the country.

He cited the example of India and China, which are producing more than 30pc of electricity from coal while Pakistan is not even producing 1pc from this source.

The members of the business community demanded of the government to implement financial discipline at public sector entities, including Pakistan Railways, Wapda, PIA, Steel Mills which were incurring loss of over Rs600bn annually.

The ICCI members said that the loss-making PSEs rather be privatised or at least their 20pc shares be offered to private sector and government expenditure be saved.

The also demanded an increased contribution of agriculture sector in the tax collection mechanism.