According to the budget proposals of the OICCI for 2017-18, the targets given by the FBR hierarchy to the LTUs, should be related to realistic research based growth projections in different business sectors. Though being an internal matter for FBR, it does cause undue pressure and hardship to OICCI members who are forced to make payments well beyond their legitimate liability and subsequently seek relief through long drawn and cumbersome appeal process or wait for years to get tax refunds realised.
The OICCI proposed that the results of nearly all business climate surveys, around the world, indicate that tax environment and tax rates are given the highest priority by prospective investors and it is a significant deciding factor in attracting FDI inflow into a country. Therefore, as in the past years, the OICCI members strongly advocate that the government should factor in the points before finalising the 20 17-18 budget proposals.
Firstly, tax policies, which lead to longer term investment plans should be suitably protected to ensure a 10-year phasing out period so that local and foreign investors could base their plans on policies which are predictable and consistent over a reasonable time.
Secondly, growth in tax collections, over and above the projected growth from the organised sector, should be based on broadening the tax base and bringing new tax payers into the tax net. This needs to be quantified based on verifiable economic data and performance measured through enforcement on a regular basis. The proposed Research and Analysis wing at FBR can be a useful source for such data. It is OICCI's considered view, that the 2016-17 finance bill had introduced some new measures, which had limited revenue potential, but had a negative impact on business confidence of existing and potential new investors, with longer-term negative implications on FDI as well.
The OICCI has always emphasised on value creation through strong enforcement. The OICCI members firmly believe that their existing laws are comparable with legislations of the other emerging markets; however, their enforcement has been compromised. "We need to strengthen our enforcement capabilities on fair and just lines and strong result-oriented accountability process should also be exercised over tax authorities."
The OICCI also recommends that the Tax Reform Commission 2016 report be judicially and transparently implemented with periodical monitoring of overall impact on tax administration: eg reduction in number of appeals and ad hoc fiscal measures for example, regulatory duty, mini-budgetary measures etc; tax payee's morale and motivation ie customer satisfaction - without any need to introduce periodical tax amnesty schemes and broadening of tax base with significant increase in tax filers and revenue collection proposals are divided into the sections including structural/procedural reforms; income tax; sales tax; custom duty; federal excise duty and industry specific proposals.
Copyright Business Recorder, 2017