KARACHI: The government should bring down sales tax rate to single digits and end the culture of SROs (statutory regulatory orders), said speakers at a pre-budget seminar organised by the Karachi Tax Bar Association (KTBA) on Tuesday.
Tax consultants and tax experts who spoke on the occasion asked the government that instead of focusing only on revenue generation measures in the budget-making exercise, it should offer incentives to taxpayers so that investment and economic activity could expand.
They were also critical of the policies which keep targeting existing taxpayers for increasing revenue and giving free hand to tax evaders belonging to the affluent class.
Bemoaning the use of unfair means by the revenue collecting agencies to meet their targets, the speakers said that the tax authorities even freeze bank accounts of taxpayers for forceful recovery of disputed revenue amount.
The Federal Board of Revenue (FBR) is not updating the Active Taxpayers List (ATL) properly because of which filers also have to pay higher tax rate, particularly withholding tax, they said.
They added that the revenue collecting agencies sometimes misused the penalties imposed by the FBR instead of using them to deter defaulters and non-compliant taxpayers.
The suspension of taxpayers by field formation officers is also going on at a very high frequency and without issuing any show-cause notices to taxpayers and giving them hearing opportunity. Moreover, these suspensions and blacklisting of taxpayers are mostly done on vague grounds, such as non-filing or late filing of tax returns, and discrepancies detected by Crest computer system of the FBR.
After being suspended, a taxpayer has to face a lot of hardship in getting their name unblocked by the relevant tax department or officer. The worst-case scenario is that if a taxpayer is a director or a partner in more than one business concerns and his name is suspended in any of these businesses, all the connected firms and establishments are equally affected. This means that all these business concerns could not operate until his/her name is cleared from the suspension list.