Thursday, October 22, 2020

ICAP holds National Tax Conference 2019, Pathway to Prosperity

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Zain Zubair
Zain Zubair
Zain Zubair is a staff writer for World News Observer. He is studying ACCA in Pakistan. Besides Accountancy and writing pieces, he loves cooking and nature photography. Zain has attended various modern journalism workshops. Contact: [email protected]

It is incredible to note that even today 72 percent of tax burden is on the industry in Pakistan, while 38 percent is on remaining 80 percent of the economy which is inherently unfair system and against industrialization.

For Pakistan, potential of tax to GDP ratio in 2019 is 17 percent this is as far as we can push it and interesting for FBR, the ratio is from 11.2 to 14 percent. The rest is provincial and other federal tax.

So, there is no way the government should agree over the next three years to the IMF program to anything to exceed as for as FBR is concerned 14 percent of GDP and that is indeed going to be a major challenge.

This was recommended by Dr. Hafeez A. Pasha, a prominent economist and former federal minister for finance, economics and regulatory affairs.

He was delivering his speech as key note speaker at National Tax Conference organized under the banner “Taxation – A Pathway to Prosperity” here at a hotel. It was first of its kind conference hosted by the committee on Fiscal Laws under the Institute of Chartered Accountants of Pakistan (ICAP) taking cognizance of the various tax issues hindering the growth of the economy.

The conference was attended by leading authorities and senior officials from the Finance Ministry, FBR, Ministry of Commerce, Ministry of Industries, Engineering Development Boards and Chiefs of respective Provincial Tax Authorities. Other important stakeholders who attended the conference were representatives from FPCCI, OICCI, Pakistan Business Council and Tax Bar Associations.

Congratulating ICAP on taking such an initiative and organizing a very insightful Conference, he highlighted the theme of Conference and stressed on the importance of the subject of taxation and how it impacts the economy, while how a robust tax policy pushes it towards growth.

Dr. Hafeez A. Pasha said that if we go to an IMF fund program with the fiscal deficit moving towards the seven percent of the GDP and the tax ratio to GDP actually falling from 13 percent to perhaps 12 or 12.5 percent than guess what the fund is going to ask you to do? raise within the next two years, tax to GDP ratio by at least three to four percent. Are we back to same old cycle of enhancement of tax rates and further burden on the poor, he argued.

But I can assure that there is enormous pressure on us to raise tax revenue indiscriminately without concerns of impact on the economy or relatively on poor people. They just want us to raise tax revenues. First thing I want to say as I have been accused many years ago being the father of the tax regime because I was a key member of the commission but concept at that time was to tax through a withholding advance tax mechanism not a fixed tax mechanism on only unearned capital income. Three sources of income were taped by us dividends, returns on saving schemes and bank deposits. And later on we had one last idea to tax through electricity, he recalled.

And the other problem off course is as I said earlier, incidence of taxes in Pakistan. As a percentage of income, tax paid including of income tax is flat. There is no progressivity in our income tax system today unfortunately. Because this 68 percent reliance on withholding tax  many which are on expenditure on regressive items has actually made income tax somewhat look like an indirect tax.

Dr. Hafeez A. Pasha said there should be an out of box idea. India has a three percent education tax on all the taxes historically education cess. Can I humbly suggest given water scarcity issues and our committing to raise national funds for dams, diamer bhasha etc, can we not have a two percent tax called the water resources cess of year marking funds for the dams? This will be a curasive look that Pakistan wants to solve its water problem. Simultaneously let’s get out of this horrible creature called the grass infrastructure development cess once for all because we are suppose to year mark and it has pending liabilities. It’s a nightmare.

For the future get out of this JIDC, get into the WRC which is the water resources cess. This is my humble suggestion as our children of Pakistan will face acute water scarcity. It is in turkey, it has something called inheritance tax. Would Islamic council allow us to do this? He wondered.

Read also: National Tax Conference to be held in March

Earlier, President ICAP, Jafar Husain in his introductory remarks stated that the national tax conference was a great initiative taken by ICAP. He said that Pakistan’s tax policies need reconsideration and it is high time that the current government highlights what the tax policies should be and this should be done in consultation with all the respective stakeholders.

While noting the efforts put in by the Chairman of Fiscal Laws Committee of ICAP, Ashfaq Tola, he further stated situation with regard to taxes is irritating that either the tax laws are not based on proper research or tax regulators or collectors are not ready to accept the changes in the law that requires a change of mindset also. We are moving in circles. We are having same changes after every five to six years. To increase the tax revenue, we need to document the economy. This is not a new knowledge, he stressed.

In present times, broadening of tax base, documentation of economy and increase in tax revenue, all three can be achieved by the collection and analysis of the information to the use of technology.

Ashfaq Tola, Chairman Fiscal Laws Committee at ICAP appreciated the stakeholders, speakers and panelists who had come to the conference to share their knowledge and promote some much need discussion on this very important topic.

The conference was divided into three technical sessions which all addressed various aspects of taxation and garnered an insightful discussion from the panelists as well as the audience.

The first session was titled “Harmonisation of Tax Laws – A Miracle in Waiting.” The esteemed speaker for the session was Asif Haroon, Partner A. F. Ferguson & Co while the session was moderated by Asad Feroze, Member Northern Regional Committee ICAP.

The Second insightful session was titled “Tax Reforms – A Shattered Dream,”the context of which was highlighted by the speaker Abid Shaban, Advocate High Court. The panel was moderated by Khalilullah Sheikh, Chairman PAIB Committee at ICAP.

The last technical session of the day was “Doing Business – An Impasse,” on which the expert speaker Abdul Aleem, Chairman OICCI provided context and initiated the discussion with the panelists. Session was moderated by Mansoor Zaighum, Group Head Finance, Central Accounts and Taxation at Allied Bank Limited.

The conference concluded on an appreciative note. The well attended conference provided a platform to tax experts, professionals and those from the public and private sector to engage in a discussion and develop pragmatic solutions to for a topic which is of great importance for the country as a whole.

Zain Zubair
Zain Zubair
Zain Zubair is a staff writer for World News Observer. He is studying ACCA in Pakistan. Besides Accountancy and writing pieces, he loves cooking and nature photography. Zain has attended various modern journalism workshops. Contact: [email protected]

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