KARACHI, May 18: The Income Tax Bar Association, Karachi (ITBAK) has asked the government to bring all segments of the society into the tax net. The association further demanded that instead of enhancing tax liability of existing taxpayers the tax rates should be reduced to induce new assessees.

Since the new budget would be of great significance in the taxation history of the country as new tax law “The Income Tax Ordinance, 2001” is being implemented with lot of reforms and new ideas, therefore, suggestions being given by the bar association would also be of equal importance.

Instead of enhancing the tax liability of the existing taxpayers all out efforts should be made to widen the tax net by bringing all categories of income groups under the tax net, the Karachi Tax Bar has suggested in its 26-page tax proposals for the federal budget 2002-03.

If income and sales tax rates are reduced, the association feels it will also encourage taxpayers to declare true and correct income as well as attract new assessees. It is rightly said that no tax can be collected more than the capacity to pay and against the will of the people, it added.

The ITBAK feels that mandatory payment of 15 per cent of the disputed tax prior to filing of appeal is against the very right of seeking justice provided to every citizen of Pakistan through the constitution.

Similarly, the bar association is not in agreement with the on-going multiple system of audit of records and has demanded that only once in every fiscal year an audit be conducted by any government agency, which should be suffice the purpose of all the tax authorities, including income tax, sales tax, excise tax and monitoring divisions of various departments.

In order to encourage private savings and investment in the capital market, it has demanded that the provisions under the Income Tax Ordinance 1979, prior to its withdrawal be brought back.

Taking serious note about the attitude of the tax authorities, the association pointed out that it was universal norm that fiscal laws were amended in accordance with the decisions of the superior courts, therefore, this spirit must be demonstrated by the tax authorities in Pakistan as well.

The ITBAK is also not happy over the tax authorities practice for bringing in changes and amendments with retrospective effect and demanded this should also be in line with the global practice that fiscal laws are amended prospectively so that the contracts and agreements already concluded are not effected.

If the past practice of making amendments with retrospective is stopped henceforth, the tax bar is of a view that it will not only enhance the credibility of the government but will also attract the investment.

The laws should be promulgated in such a way that majority of positive suggestions made are accommodated and they should be based on long-term strategy achievable at the highest level, the tax bar suggested.

However, it has been appreciated by the bar association that the government is striving hard to bring reforms in various fiscal laws as well as in the working of CBR. Nevertheless, it feels that without addressing the basic issues of ‘reformers’ the objective could not be achieved.

In the second half of the document, the ITBAK has made section-vise proposals being sought by the tax experts with regard to the Income Tax Law, Income Tax Ordinance 2002, and Sales Tax Act 1990.