Govt under pressure by traders on WHT

ISLAMABAD: The government is in a catch-22 situation on the business community’s demand to withdraw 0.6 percent withholding tax (WHT) on all banking transactions, as on the one hand the IMF is closely watching the government’s response to the biggest revenue measure of the budget, on the other the rulers want to protect their basic constituency — the business community.
Finance Minister Ishaq Dar has convened a meeting of the business community representatives from all over country today (Wednesday) in which both sides will try to resolve this issue amicably.
The trading community is threatening of shutter-down strike in major urban centers if WHT on banking transactions is not withdrawn.On the other hand, the government, under the IMF programme, has imposed this measure to penalise those wanting to remain outside the tax net.
The FBR, according to official sources, is asking the business community to come into the tax net and pay only 0.3 percent on bank transactions.“But the withdrawal of tax measure is no more an easy task after the abolition of the FBR’s powers to issue Statutory Regulatory Orders (SROs) approved by Parliament.
Now the government will have to issue an ordinance which will ultimately lapse after 120 days or present it in Parliament to make changes to the law,” said a top official of the FBR.In case of emergency, the ECC is empowered to approve the issuance of SRO, but there are certain limited situations where the ECC can intervene.
The official said the FBR projected revenue collection of Rs35 billion with imposition of 0.6 percent WHT on banking transaction exceeding Rs50,000, but in reality the revenue collection might exceed Rs50 billion mark with this revenue measure.
In this scenario, the IMF high-ups are closely watching the emerging situation. If the government caves into the pressure of the business tycoons then it will have to take other measures to satisfy the IMF otherwise the future of the Fund program will be at stake.
The business community has called upon the government to immediately withdraw 0.6 percent advance tax on banking transactions of Rs50,000 and above for non-filers, as it has created a lot of problems for the businessmen and would badly affect business activities.
Muzzamil Hussain Sabri, President Islamabad Chamber of Commerce and Industry, said the government should have taken consulted the business community leaders before imposing this new tax, as it had disturbed the business community of the whole country.
He said the government should also withdraw enhancement of sales tax from 2 percent to 3 percent on registered exporters and 5 percent on non-registered exporters and grant zero-rated facility to exported-oriented products.