Daily Times

KARACHI: Pakistan Businessmen and Intellectuals Forum (PBIF) President Mian Zahid Hussain urged the government to introduce simplified tax regime in the upcoming budget.

“The government should focus on direct taxation and introduce flat rate for as many sectors as to improve relationship between tax payers and tax collectors and enhance collections. Pakistan had 1.6 million taxpayers in 2006 which has now been reduced to around one million that indicates lack of trust between tax payers and collectors which can be restored with little efforts,” he said in a statement.

Zahid Hussain said that low tax collection has impaired the state’s ability to spend on social sector and equal distribution of wealth and it has become difficult for the government to raise revenue for its own expenditures. He said that preference of indirect taxation over direct taxation has increased poverty and other social problems while it is helping the rich to enjoy without any obligations.

The veteran business leader said that there are 58 kinds of withholding taxes of different natures imposed on masses with around 5,000 tariff lines. “Industrialists have to tackle 55 different federal taxes and other provincial taxes; their compliance requires a lot of time, which resultantly increases cost of doing business,” he added.

Out of total collections, 75 percent of revenue is collected through indirect taxes, while 80 percent revenue of collections of direct taxes comes from WHT. He said that flat rate would not reduce revenue but increase it and the government can start it in one area or with one sector to see the result of the experiment. Some big companies are silently shifting burden of taxes on masses, which must be noticed, he said, adding that flaws in the taxation system has resulted in poverty, as 80 individuals around the world have more wealth than half of the world’s poor.