LAHORE: Federal Finance Minister Miftah Ismail still regrets that traders escaped from documentation due to political influence, although he had made it easier for them to pay their total tax liabilities through power bills without human interference.
He expressed his frustration in an open two-hour interaction with businessmen from across the board. He vowed that the traders would soon be brought under the tax net. Businessmen that gathered at the Lahore Chamber of Commerce and Industry (LCCI) to meet Miftah; however, ignored this warning and instead pressed for collecting actual taxes from agriculture that accounts for 21 percent of Pakistan’s GDP.
They contended that the country hardly collects around two billion from agriculturists. The businessmen conveniently ignored the fact that traders account for 12 percent of our GDP and pay nominal tax. It is clear that both agriculturists and traders are successfully avoiding taxes on the strength of their political influence.
The finance minister gave a review of the precarious economic conditions of the country, particularly after the widespread devastation caused by the floods. He said belt tightening would continue for a while including technical slowdown in opening of letters of credit for imports.
He broke down while narrating the plight of flood victims and appealed for generous donations from the businessmen. Many participants consoled him and assured him of their help.
One auto part supplier, while pleading his case on restriction of imports of original equipment manufacturers has dried orders for auto component vendors. He exhibited his callous attitude when he said that if the issue is not addressed, he will cry the same way as the minister did on the misery of flood victims.
The minister replied that import restriction was imposed in consultation with OEMs, and they have no problems. Moreover, he added the OEMs are placing regular orders to their vendors. He said he cannot force the OEM to place orders with his company.
Another entrepreneur complained that the Federal Board of Revenue goes to length in case its verdict is overturned in appeals from tribunals to high court and the Supreme Court. He said the FBR should be asked to refrain from filing appeals if the taxpayer gets a relief.
The FBR chairman said the board could not forgo its right of appeal. There are many cases when the businesses go on filing appeals if they are defeated in tribunals and high court and ultimately, they lose their case in the Supreme Court.
The state has as much right to fight its cases as the private sector. The major problem was the delay in dispensation of cases, which hurts both the entrepreneurs and the state. This issue needs to be resolved.
A carpet exporter rightly protested that an FTA with Turkey was signed without taking the carpet sector into loop. He said Turkey was the second largest destination for hand knotted carpets in the world. Pakistan, he added, could have obtained concessions in duty on carpet exports to Turkey. The minister agreed in principle.
Representatives of poultry breeders termed sales tax on grandparent stock and processed chicken meat unfair. The minister said the tax on grandparent stocks would be withdrawn, but not the tax on processed chicken meat. However, he said the government could consider lowering the tax rate.
A former chairman of FPCCI was the lone businessman that asked the minister to impose more taxes on the rich. To save foreign exchange he suggested a total ban on foreign trips by Pakistani families.
He said even for business trips the government should ensure that businessmen do not waste foreign exchange on staying in 5-star hotels. He said the use of credit cards in foreign countries should be restricted as businessmen spent unlimited amounts through their credit cards. He also suggested restricting pilgrims to one Hajj or Umra in five years.