Taxation policy defended: CBR chief stresses need for applying fiscal laws correctly

KARACHI (April 04 2003) : The Chairman, Central Board of Revenue (CBR), Riaz Ahmad Malik, while defending the present taxation policy, has said what we still have to do is to correctly apply the policy by spreading our fiscal laws to the whole of Pakistan, including the Federally-Administered Tribal Areas (Fata).

He was speaking at a luncheon meeting of the American Business Council of Pakistan (ABC) on the taxation laws at a local hotel on Thursday.

Riaz Malik disagreed with the ABC President, Arshad Nasar, that taxes and duties continued to be high in the country.

He explained in detail the income tax, sales tax and customs duties, and said that it should be a matter of satisfaction for everybody that “we have moved away from taxing investment to taxing consumption.”

This was a major shift during the last four years, he added.

The CBR Chairman said that lowering of taxes had brought losses to the tune of 3.5 percent of the gross domestic product (GDP) or Rs 100 billion.

He said the government was endeavouring to broaden the tax-base, and hoped that during the next four years, another 2.5 million taxpayers would be added.

He dealt with the reforms, which have been brought in the income tax, sales tax and customs duties, saying: “We are looking at levelling of the fiscal deficit from seven to 4.5 percent. Our effort is to go in for simple and easy to do laws,” he added.

Referring to the pilot project that has been launched at the Karachi Port with the idea of eliminating the role of the middleman, he said this project should be fully operative within six to eight months.

Replying to questions, the CBR Chairman said that the menace of smuggling could be controlled to a very large extent if the tariff system was introduced in Afghanistan because that would reduce profit margins and ultimately result in reducing smuggling.

On the question of tax on agriculture, he said that it was a provincial subject and the provincial governments could impose income tax on the earnings from that source.

Earlier, Arshad Nasar assured the CBR Chairman that the ABC was encouraged by the fact that the government was improving the macro economic indicators and that the key issues were being addressed.

The ABC also looked forward to working with the government of Prime Minister Mir Zafarullah Jamali to further improve the investment climate for potential investors, he added.

He mentioned a few issues to be addressed at the time of formulating the 2003-04 Federal budget, ie high duties and taxes and high customs tariffs, high personal taxation, refunds of income tax and sales tax, advance tax and appeal process.

Arshad pointed out that a happy existing investor could take a faster decision for enlarging investment.

Moreover, the existing investor was always the first contact point of new investors for getting a direct feed back on business environment, said the ABC chief.

As such, the ABC would continue to work with the government and act as ambassadors to promote new investment, he added.

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