Govt should focus on direct tax collection: experts

KARACHI: The government should focus on improving collection of direct taxes instead of pressurising the masses through indirect taxes, experts said on Saturday.
The government needs to improve its tax regime and should device a mechanism to collect direct taxes, the experts said during a Budget Discussion Forum organised by the Karachi Press Club.
Budget deficit should not be considered negative, said Shabbar Zaidi, a tax expert.
Emphasising on the importance of Provincial Finance Commission (PFC) and local government, the speakers said Provincial Finance Commission is part of the constitution, but the cities and districts lack due share of their rights.
Zaidi said that the upcoming budget 2015/16 would not be different from the previous year, just figures of revenue collections and expenditures would be revised up by 10 percent.
Ishrat Husain, former governor of the State Bank of Pakistan, said the local government system is the ultimate solution of several problems.
Husain said the private sector remains the main contributor in revenue generation, as its share is 80 percent, while the government share remains at 20 percent.
The private sector investment plans depend on the budgetary policy of the government and it is the responsibility of the government to facilitate the private sector.
Husain supported the idea of privatisation and said he believes that its releases the burden of the government to support the sinking government entities.
He narrated the example of United Bank Limited and HBL Bank Limited, which were eating up Rs41 billion from the government’s pocket.
After privatisation, both the entities are contributing Rs50 billion tax revenue and also giving dividends, he said.
However, he said that the government should have a strong regulator to monitor the private sector.
Husain said that the government should tax all incomes above Rs0.4 million, including agriculture sector.
The government should improve the direct tax equity in order to increase the tax revenue.
He suggested that the property tax in Karachi needs to be revised since it was not revised since 2001.