Wednesday, April 15, 2015

Serena Hotel, Faisalabad

President ICMA Pakistan

Presented By : Kashif Mateen Ansari

Pakistan at a Glance

National and Social Issues

Corporate Issues

Economic Issues

Global Standings

Budget Considerations

Who can forget 16th December, 2014

Even our Children are not Safe

Trust Deficit

High Cost of Doing Business

Ineffective implementation

Enforcement of rights and contracts

Ineffective Utilization of

Resources

Investment Insecurity

Corruption

Lack of Research & Development

Tax Evasion

Budget Deficit

Negative Balance of Trade

Government Spending

“My problem lies in reconciling my gross habits with my net

income.” — Errol Flynn

Alarming Social Indicators

Energy

Crisis

Undocumented Economy

Ineffective Governance

Inconsistent Government

Policies

Deteriorating Law & Order

55th in 178

Countries

110th in 189

Countries

Factors Standing Total Countries

Institutions 123 148

Infrastructure 121 148

Macroeconomic environment 145 148

Health and primary education 128 148

Higher education and training 129 148

Goods market efficiency 103 148

Labor market efficiency 138 148

Financial market development 67 148

Technological readiness 118 148

Market size 30 148

Business sophistication 85 148

Innovation 77 148

Items Standing in the

World (as on 2008)

Apricot 3rd

Buffalo Milk 2nd

Chickpea 3rd

Cotton, lint 4th

Cotton, Seed 3rd

Dates 5th

Mango 6th

Onion, dry 4th

Oranges 11th

Rice, paddy 11th

Sugarcane 5th

Tangeries, Orange, Clementine

9th

Wheat 10th

Reserves Standing No. of

Countries

Statistics

Year

Oil Reserves 54th 96 2005

Natural Gas Reserves 28th 100 2007

Coal Reserves 15th 36 2008

Nuclear Power Generation Capacity 28th 31 2012

Electricity Production 31st 184 2007

Challenges

are like

this…

But we are

optimistic

and

hopeful …

What we

need to do …

Minimize the gap between ‘revenue’

and ‘expenditure’ by taking

measures to broaden the tax net.

This would help increase the tax to

GDP ratio.

Need to reduce the Trust Deficit so

that the People willingly fulfill their

Tax Obligations. The tax collection

services shall be accurate and based

on mutual trust and respect.

Repositioning of image of revenue

collection authority as partner in

country’s progress rather than agent

taking away the hard-earned money.

Enabling System for Taxpayers to pay

their Taxes.

No additional tax burden on existing

tax payers, especially corporate

sector. This would encourage

business activities and investment in

the country.

Bring the undocumented sector under

the tax net. This can be achieved by

reducing the cumbersome processes and

doing away with rampant corruption in

tax machinery.

Enhance the role of professional

institutions like ICMAP, who can

provide professional backbone for

the processes of good governance,

audit and review.

Increase the allocations for health,

education, housing and transport to

improve the quality and standard of

living of the common people.

In order to meet budgetary targets

we have resorted to oppressive

taxes, shifting incidence on the

poorer segments of society and

exempting the rich.

Adopt austerity measures and cut

down non-development

expenditures, without jeopardizing

the goals of economic growth.

A single ‘Business Registration

Authority’ may be established for

maintaining complete data base of

business entities.

An Independent statutory body may be established to propose amendment in tax

laws. The amendments in tax laws should be finalized a month before tabling the Finance Bill in the parliament and disseminated for

comments from the stakeholders.

Regressive Taxation shall be avoided. Since 1991, distortion in tax base

increased the burden of taxes on the poor. By some estimations this figure is 38 percent whereas on the rich it stands

reduced by 18 percent. [It is a system in which those with low incomes

pay proportionally higher taxes than the wealthy.]

Over reliance on indirect taxes has contributed in pushing an

overwhelming majority of Pakistanis towards the poverty line. Their

number is now more than 60 million. This need to be fixed and adequately

addressed.

The Retail sector should be brought

under tax net by offering some

incentives. They may be required to

update stock daily and pay one

percent tax on all kinds of purchases.

FBR should impose tax on medium and heavy transporters. As their income is

not verifiable, they should be charged a fixed annual tax i.e. Rs. 10,000/ ‐ for medium transporters and Rs. 15,000/ ‐

to 25,000/‐ for heavy transporters.

Keeping in view of high increase in general price level, the basic tax exemption limit for salaried class

persons be enhanced from present Rs. 400,000 to Rs.500,000 per annum (i.e.

Rs.41,666/‐ per month).

Salaried class may be allowed tax credits on expenditure on education of their children

as well as tax credit on their actual expenditure on account of utilities (i.e.

electricity, gas, telephone and water bills).

etc.

The government should consider to

provide tax holidays and incentives

to innovative and new industries,

especially those established in

undeveloped areas.

Provinces should also tax rich

landowners and collect tax on all

services but at a low rate of 5%.

Tax rebate to teachers and

researchers should be brought to

previous level of 75% in consonance

with government’ policy to promote

education and research.

Professional service providers, who by their governing statutes, are not allowed to get

incorporated, should be excluded from ambit of 'minimum tax' or they may be

allowed to carry forward such minimum tax for next five tax years.

Currently, income tax exemption is

granted on export of IT related

services. Export of services by

professionals like engineers, architects

and accountants should also be exempt.

The current rate of 17% sales tax is comparatively higher in region . It

should be brought down to single digit and it should be non‐adjustable and non‐refundable. This would help in

improving tax collection.

Sales tax should be collected at single stage i.e. at import or manufacturing stage. In the value‐added chain industry, GST should be collected at 0.5% at each stage of value

addition to complete the chain. This would help in the documentation of economy.

The authority to block bank accounts or suspend or block sales tax registration/ NTN No. shall only be vested in Regional

Commissioners or DG, LTU and this authority should not be allowed to be delegated to any subordinate officer.

The Sales tax Act does not contain any provision for allowing adjustment in respect of bad debts after deposit of sales tax. It is suggested that either special provisions be inserted to allow such adjustments whenever it occurs or the

time limits for issuing of credit and debit note be extended up to 365 days.

There should be a comprehensive list

of inadmissible goods and service in

the Sales Tax Act, 1990.

Find ways to handle

Poverty

Inequality

Economic Growth

Justice

Rapid industrial and economic

growth and socio-economic justice

should be our main objectives. Tax

being a by-product will automatically

increase.

Before I Conclude, I would say …

According to O’Neill’s projections, Pakistan’s economy

would grow 15 times in the next 35 years or so to

become 18th largest economy of the world by 2050. We

shall take measures now to give a Prosperous Pakistan

to our coming Generations …