BUDGET PROPOSALS 2016-2017
The Research & Development Department of Sheikhupura Chamber of Commerce & Industry (SCCI) have conducted a detail survey and meetings with the different businessmen and industrialists before preparation of Federal Budget Proposals 2016-2017. In a nutshell the crux of survey is giving below for your information and consideration.
• According to the survey “Corruption” is a main root cause for deterioration of the economy of Pakistan. Many Government Departments are suffering with different mal administration and with corrupt officials and officers.
• The wild discretionary power are available to officers in Government Department especially in Inland Revenue Department which have determine negative effects on our whole taxation system. The discretionary powers should be abolished or reduced for providing justice to the taxpayers
• Discretionary powers should be abolished and brought these powers into a operative comprehensive monitoring system which should be monitored on every stage. Government should introduce minimum documentation system for the taxpayers according to their business. It is not possible for any manufacturer to keep record of withholding tax and income tax to his owns and others for the collection of sales tax and income tax.
• At present tax system is highly cumbersome and demanding number of documents for filling income tax and sales tax returns. An assesse have to submit returns for Income tax purposes 1 x 5 auditable. In case of Sales tax. The value/quantity and number of invoices deposit WHT, IT, ST by at source x monthly returns both (buyer and Seller). 12 x 5 x 7 = 421 returns auditable. it is not justified.
It is therefore suggested that income tax and sales tax procedures should be made simplified to restore the confidence of taxpayer.
• To coop with all these problems it is suggested that every Government Department having concern with the trade and industry should be given representation to concerned Chamber of Commerce & Industry in their Board of Management for yielding better results. However we are giving below Federal Budget Proposals 2016-2017 for your information and consideration:-
1. Members of Senate, National and Provincial assemblies are consider as beacon of lights for the citizen. They fully understand the problems of people belonging to all segments of society. Legislators must be made responsible to take part in legislation. However it has been observed that they themselves defy tax laws in the country. The tax directory 2014 publish by FBR give true picture that how many elected representatives paid income tax on their part and their tax amount paid was very low as compare to enjoyment of their life other segments of the society. After 67 years of independence the Income Tax Ordinance could not discussed in the parliament to make it an Income Tax Act.
It is suggested that all taxable income should be brought under tax net including agriculture income so that everyone could enjoy equality in taxation system.
2. Money earned through sale and purchase of property, industrial and residential plots always turn into black money because land and properties are registered on official DC rate instead of market rate. It is pertinent to mention that DC rate is far lower than the market rates. Both seller and purchaser took benefits of lower rate which generate many social and economic problems like smuggling stagnation of money out of economic circulation. There is huge difference between DC rate and market price of lands.
It is suggested that registry should be made on market price rate to avoid maximum portion of money to become part of black money. It will definitely encourage the source of white money.
3. Ransom against kidnapping paid to kidnappers have not been registered in the income tax department despite the fact that FIRs are registered against the kidnappers by the relatives of victims. Even then after freedom, neither the victims showed this amount in their income tax return nor income tax officers accept their expenses. Society is suffering with multiple fears.
It is suggested that govt. should realize such cruel reality of the society and give relief to such person suffered from kidnapping like situation in the Inland Revenue Department, so that everyone honestly show their expenses in the income tax return. It is further suggested that income tax return form should be made simplified with minimum documentation so that citizen could mention all kind of their expenses in the income tax return without any fear.
4. It is appreciated that after long deliberation govt. has issued security feature of Stamp papers with barcode and serial number for the benefits of citizen to curb fraud in courts due to misuse of old traditional stamp papers. These stamp papers are the basic reason of crime and murder of people in the society. More than fifty years old stamp papers can be used with the connivance of concerned departments for providing illegal benefits. It is pertinent to mention that old stamp paper have never been cancelled after elapse of sixty seven years after the partition.
It is suggested that writing on stamp paper should also be registered with registrar of courts or SECP or as the govt. deem fit for registration of such writings on stamp papers by any department. The old stamp papers not used until now should be cancelled immediately.
5. Population census has not yet been conducted since long ago and as such our future planning especially for mega projects are badly suffered.
It is therefore, suggested that population census should be conducted as early as possible for the future planning of the country.
6. Taxes collected from industry should be spend on the industries of concerned area. Taxes collected from trade and commerce should be spent for the welfare of traders and importers & exporters of concerned area under the CSR of Government.
It will definitely encourage the businesspersons to pay taxes voluntarily.
7. Local manufacturer are working hard to produce such items in Pakistan which are not yet manufactured here but its raw material and machinery are imported on large quantity if we will produce these items in Pakistan. The import bill will be reduced considerably.
It is therefore, suggested that to encourage the local manufacturing industries, different incentives should be given including tax holiday for accelerating the industrialization process in Pakistan.
8. Every person should be allowed to access the data of others persons, industries and businesses under Pakistan’s Information Act.
It will infuse healthy completion among the business and industries competitors.
9. It has been observed that few senior officers do not write the ACR of their subordinates after completion of many years of service which create hurdles in their promotions and financial benefits.
It is therefore suggested that ACR (Annual Confidential Reports) of Government officers should be made public and publish online and submit to senior officers after every two year of service. It will help and support the honest officers. ACR should be treated as “Annual Credible Report”.
10. It has been observed that efforts have not been made for the capacity building of institutions under strong monitoring system.
It is suggested that capacity building of all the institutions especially concerning with trade & industry should be treated on top priority basis.
11. It has been observed that banks and DFI’s consider personal grantee for advancing loans instead of feasibility of projects in Pakistan, resultantly people discouraged and remain dependent to grantors who use this investment in their favor in future. It is therefore suggested that State Bank of Pakistan should issue instructions to all banks to consider the feasibility of project for advancing loan instead of personal grantee for rapid industrialization in the country.
12. Pakistan have papulation of 20 cror (aprox) and 100 person need one ground to
play. Pakistan need 20 lacs play grounds.
It is therefore suggested for healthy Nation playground, parks and gardens should be established in different cities of Pakistan.
ECONOMIC & INDUSTRIAL
1. At present the country is facing two major problems i.e. security issue and load shedding problem of electricity and gas which has impeded the economic activity very badly.
It is therefore suggested that these two issues should be examine properly and arrangement should be made for the generation of all kind of electricity i.e. hydel, solar, windmill, nuclear and bio gas etc. to overcome the energy crises in the country for boosting economic, investment and industrial activities.
2. Power distribution companies always manipulate the situation. On independent industrial feeders few domestic connections are provided to start load shedding just on the basis of domestic consumers.
It is therefore, suggested that independent industrial feeders should not be disturbed for any reason to safeguard interest of industries.
3. There are high rate of taxes in Pakistan. Number of Federal and Provincial taxes are imposed on citizens including levies, custom duty, surcharge, and cess. Rate of penalties are also very high on none and late tax return filers which has jeopardize the whole taxation system in the country.
It is therefore suggested that high ups of FBR and Inland Revenue Department should adopt business friendly policies to gain the confidence of taxpayers. Cumbersome, lengthy and non-friendly audit should be simplified. Income and sales tax audit should not go beyond 5 and 1 year respectively. Income tax annual returns 1 x 5 auditable. In case of Sales tax the value/quantity and number of invoices deposit WHT, IT, ST by at source x monthly returns both (buyer and Seller). 12 x 5 x 7 = 431 returns auditable. Apart from above industrialists have to submit their monthly contribution form to EOBI and Social Security Institutions is it Justice? This procedure should be made simplified.
4. Income tax and sales tax payers are also facing difficulties while their industrial units could not use natural gas for three months during winter. under the contract with SNGPL, gas supply to all the concerned industrial units remain suspended during peak winter months but industry have to pay fix charges of sales tax and income tax on their high utility bills which is not justified.
It is suggested that charges of income tax and sales tax on utility bills should not be demanded from industrialists during the gas shutdown period and from those units which have been closed due to certain reasons/problems for a longer period.
5. Value Added Tax (VAT) system should be introduced with minimum documentation in Pakistan to discourage corrupt businessmen, tax officials and other Government officials.
6. People are paying more taxes but not agreed to register with credible documentation with Inland Revenue Department due to fear and coercive attitude of Inland Revenue Department.
It is therefore suggested that FBR should adopt a business and people friendly tax policy to encourage the citizen to come forward for voluntarily registration with Inland Revenue Department.
7. Under invoicing, over invoicing should be eliminated by the coordination of stake holders and arrangement of frequent meetings of custom officials with the members in concerned Chamber of Commerce.
8. Good governance play a key role in the development of any country, however professionalism made he project of Nation importance viable and successful.
It is therefore suggested that govt. should mark such arrangements that corrupt dishonest officials must be discouraged to achieve the objectives of good governance. Universities and technical institutions make necessary arrangement for the capacity building of students studying in different disciplines of professional studies.
9. Gas policy for SMEs, cottage and small industrial units are very discouraging as gas is still not available after three months shutdown period of winter.
It is therefore suggested that highups of SNGPL and OGRA are advised to make necessary arrangement for supply of gas according to undermentioned suggestions.
Government supply gas as follow:
• 24Hrs x 2Days =48Hrs
Whereas SMEs and cottage industries demand gas eight hour per day for six days in a week.
• 8Hrs x 6Days =48Hrs
If this proposal is implemented they can run at least one shift of small units and engage the labor for entire week. They are not demanding more than their share. It is just like to exchange of money for instance;
Rupees Qty. of Notes Value
• 100 x 1 =100
• 10 x 10 =100
• 20 x 5 =100
• It will not disturb the policy of SNGPL
• There will be no difference of gas pressure
• There will be no revenue difference
• There will be no difference in quantity of gas supply.
10. Industrialists are facing many problems at ports in Pakistan which includes unhealthy attitude of custom officials, high demurrage charges, assessment of higher ITP, import trade price, more than the actual invoice. These are all discouraging tactics.
These hurdles should be removed immediately to encourage importers for more production and consumption in the country.