Flat tax rate demanded

LAHORE: Former federal finance minister Dr Salman Shah has said that the current tax regime has many defects, which could be addressed by introducing flat and simplified taxation coupled with professionalisation of taxation-related staff.

He was addressing a seminar organized by PRIME Institute titled "Towards flat taxation".

Dr Shah said that concerted and consistent efforts are required to reform the tax system, and improve the quality of collection.

He said that the government has achieved great results in the past through self-assessment schemes, but that progress was undone in favour of more coercive powers to the collection agencies.

Taxation expert Huzaima Bukhari said that the tax code could be immensely less complicated.

Citing her study, she proposed that income tax on individuals should be fixed at 10 percent and on businesses at 20 percent.

She also proposed a single stage sales tax and a single slab Customs duty at five percent each.

Revenues can be increased to Rs5 trillion by making these changes, she said.

Dr Ikram said that under the current laws and system, voluntary tax compliance would be out of the question.

The tax compliant businesses have to pay taxes at least 50 times annually, he said, adding that the current system creates incentives and opportunities for corruption.  Ali Salman announced PRIME Institute Center for Fiscal Reform.