960421

Kalabagh be built forthwith

LCCI favours axing

all exemptions,

subsidies

RECORDER REPORT

LAHORE: The Lahore Chamber of Commerce and Industry in its budget proposals for the year 1996-97 has urged upon the government to withdraw all kinds of tax exemptions and subsidies and levy taxes on all sectors and classes including the agricultural sector, while demanding an upward revision of fixed sales tax and a ceiling of maximum sales tax at 7.5 percent.

Besides demanding reduction in import tariff to a maximum of 35 percent on finished goods and zero tax on raw material, the LCCI has also demanded the abolition of PSI agreement.

The Punjab's prime body of businessmen has stressed the need for constructing Kalabagh dam immediately and has also; given a note of warning against liberalising trade with India.

The LCCI has also suggested downward revision of income tax rates reducing them to a maximum of 30 percent from private limited companies and 25 percent for public limited companies.

The Chamber has also demanded the reintroduction of the original self-assessment scheme of 1979.

Describing the presumptive and withholding tax iniquitous, the LCCI has demanded their pushing out over a period of five years.

The Chamber also demanded the exemption of income tax on the income of chambers of commerce and industry. The exemption limit in wealth tax be raised to Rs 2 million from Rs one million, it said.

The LCCI proposals prepared by its think-tank have suggested the abolition of wealth tax on all shares declared as production assets.

The LCCI has also supported the demand of traders to exempt from wealth tax one house, one shop and one car.

However, the LCCI suggested that exemptions/concessions in respect of customs duty should be withdrawn altogether.

The Budget Proposals of the LCCI are as follows:

The GST should be imposed on all sales and at all stages of economic activity.

The rate of sales tax should be kept at a rate of not more than 7.5 percent.

All types of exemptions to any person, any product, any service or any territory in the country should be withdrawn. The only cases fit for exemption may be food grains and essential pharmaceutical products.

FIXED SALES TAX

We should not ignore the ground reality that at present a major part of our economy is not documented. Keeping in view this fact, a scheme of fixed sales tax was introduced alongwith fixing of revenue targets for these industries. It is quite encouraging that the revenue generation in case of such industries covered by fixed sales tax scheme have always exceeded their prescribed targets. In view of this encouraging response, the scheme of fixed sales tax should be continued by substantial upward revision in targets.

The concept of turnover tax (0.5 percent on turnover) irrespective of quantum of income or in presence of even loss is unfair. An assessee who has suffered loss should not be subject to income tax under any pretext.

Domestic production should not be taxed at a rate higher than the tariff for similar imported product, except on public interest items like cigarettes.

Similarly, concessions and subsidies on agricultural sector like waiving off agricultural loans, subsidy on irrigation water, lower electricity tariff as compared to the industrial electricity charges, high support prices, concessions on buying tractors and agricultural machinery are consuming a lot of already meager national resources.

It is suggested that support price of wheat may be raised to international level and all subsidies and exemptions (i.e. rates of inputs like water, electricity, seeds and fertilizer etc.) must be abolished.

The government should privatise power distribution system rather than power generation and in this regard Kot Adu Privatisation appears to be a step in the wrong direction.

One of the factors impeding Pakistan's export performance is the lengthy and cumbersome drawback and adjustment system for refund of taxes paid on exported goods. The Chamber feels that the existing system must be streamlined with a view to make our exports zero-rated. The offered for serious consideration.

The executive arm of the Taxation Department may be separated from the Judicial Appellate arm without creating a separate Judicial Cadre.

The tax officials should not be given unreasonable revenue targets but targets should be assigned for bringing new tax payers for widening the tax net.

Frequent changes in Government policies and high rates of utilities and mark-up are making the industrial sector in the country totally unviable. The large increases in the prices of utilities i.e. electricity, gas and POL (if increases in current financial year) are a great hindrance to industrial growth. Coupled with this price hike is the rather high rate (20.24 percent) of mark-up being charged by the banks on working capital loans.

The rural industrialisation scheme and the provisions given under SRO 484 should be extended for another five year.