KARACHI: International financial and accounting body ACCA has suggested to policy makers in the Central Board of Revenue (CBR) what it called ‘Green Taxes’ in Pakistan to save deteriorating environmental cleanliness in Pakistan.
ACCA for the first time has presented pre-budget proposals on Saturday. Second round of pre-budget proposals will be held next week in Islamabad in which chairman CBR will listen these pre-budget proposals.
ACCA said these Green Taxes should be made integral part of the anti-pollution strategy. ACCA in this regard as first step proposed imposing tax on plastic bags.
Duty has been imposed on plastic bags in a number of countries such as Ireland, Korea and Taiwan.
Stressing the need for reducing salary tax rate structure it said, “Current tax rates for salaried persons are quite high, taking away approximately 1.5 month salary of a salaried employee with average income.”
ACCA proposed that instead of recovering income tax on salary on the basis of very complicated calculations, it should be charged on straight percentage basis.
It proposed that:
1. Person having Rs0.15 million per year salary should be considered zero-rated whereas at present it is 1.2 per cent.
2. The average income tax rate of 1.8 per cent for salary persons having annual income Rs0.2 million should be brought down to 1.3 per cent of income.
3. Tax rate, having annual income of Rs0.3 million be reduce from present 5.2 per cent to 2.5 per cent.
4. Salary of Rs0.4 million should attract 4.4 per cent rate from present rate of 6.9 per cent.
5. For salary income of Rs0.5 million, rate should be 7.5 per cent instead of 10.5 per cent.
6. Salary income of Rs0.6 million should attract 9.6 per cent rate instead of present 12.9 per cent.
7. Salary income of Rs0.7 million, the rate should be 11.8 per cent instead of present 14.6 per cent.
8. Salary income of Rs0.8 million should face 13.4 per cent rate instead of 16.6 per cent.
9. Salary income of Rs0.9 million should be charged 14.7 per cent rate instead of 18.1 per cent.
10. Salary income of Rs1 million should be charged 15.8 per cent rate instead of present 19.3 percent.
11. Salary income of Rs1.1 million should be taxed at the rate of 17 per cent instead of 20.2 per cent.
12. Salary income Rs1.3 million and more should attract 19 per cent instead of present 21.7 per cent rate.
ACCA has proposed that present corporate tax rate of 37 per cent for non-listed companies, 35 per cent for listed companies and 35 per cent for non-corporate and non-salaried taxpayers should be charged one uniform rate of 30 per cent.
This new rate will make Pakistan a more competitive investment center compared to other countries in the region.
ACCA said at present Singapore, Malaysia, Philippines and China have introduced tax concession for establishment of regional offices of multinationals.
To attract the foreign investment and to encourage the establishment of regional headquarters of holding companies, a new provision of concessionary income tax rates, that is half rate, be introduced in new federal budget.
To boost the exports, rate under section 154-3A should be brought down to flat rate of 0.50 per cent of export realisation, because the current rate is high.
A social security system based on European Union be introduced in the country.
Real Estate business should be brought under tax system and more emphasis should be to tax what it called ‘speculative income’.
For expanding tax base it suggested following data should be collected under lawful authority and by checking data the new taxpayers be added.
1. Withholding tax statements of taxpayers.
2. Bank loan customers.
3. Data from CAA, airlines of persons traveling abroad.
4. Membership data of all clubs.
5. Data from housing societies for sale and purchase of files and open plots.
6. Data from car manufacturing companies for booking.
7. Scritinisation of bank accounts of moneychangers to trace all cash transactions through Hundies.