PIDE stresses urgent action to stabilize economy
Instead, we advocate for the implementation of a regulatory guillotine, a proven strategy adopted by countries like Hungary, Mexico, South Korea, and the UAE, among others, they said.
Dr Haque further stated that amidst the urgent need for tax simplification and policy certainty, this budget season demands immediate attention towards streamlining taxes in a revenue-neutral manner and ensuring stability for a decade, with a commitment to refrain from introducing new taxes in each budget cycle.
The adverse effects of tax uncertainty and instability, as highlighted by the PIDE State of Commerce Report, cannot be overstated, as they have driven investments underground, hindered firm growth, and impeded corporatisation and listing. In addressing the income tax regime, we advocate for a uniform tax rate across all sources of income, with provisions for agriculture income losses carry-forward and adjustment, along with the elimination of the presumptive tax regime and taxes on turnover.
Furthermore, we call for uniformity in taxation for AOPs, sole proprietors, and corporations, alongside reforms in inter-corporate dividend income and asset sales taxation.
Transitioning from withholding taxes to Advance Income Tax mechanisms is also essential. Harmonizing the sales tax system across goods and services, expediting the implementation of POS through outsourcing within six months, and transitioning to a VAT mode with consistent rates are imperative steps forward. Additionally, excise duties should be increased on products detrimental to health and the environment, such as tobacco and beverages, to promote public well-being and sustainability, he said.
In the realm of tax exemptions and administrative reforms, it's imperative to halt all forms of concessionary financing and discriminatory fiscal incentives among businesses. Streamlining tax administration through automation to minimise human interaction is essential, coupled with the abolition of the arbitrary “filer” and “non-filer” distinction, as well as, the elimination of 'FBR Rates' for property valuations.
Tax administration must evolve towards automation, with a focus on accountability and responsibility within a technologically adept framework. An independent and tech-savvy entity should spearhead revenue collection, leveraging modern auditing techniques.
In line with this, suspending tax return audits for firsttime filers over the next five years is crucial. Tax simplification demands administrative changes, particularly digitization, and market-driven documentation practices, ensuring policy consistency over a decade. The FBR's attention should be directed towards administrative efficiency while ensuring zero harassment in tax matters.
In fostering economic growth, it is imperative to embrace openness by revitalising our import-export dynamics. Currently, import substitution strategies have rendered all KSE-100 firms inward-looking, a trend that urgently requires reversal.
Making exports a national priority demands a shift towards a pro-export trade policy, encouraging all large firms to venture into the global market and aspire to become multi-billion dollar entities. Facilitating this transition necessitates the promotion of trading houses as intermediaries in trade, potentially offering performancebased incentives such as tax rebates.
Streamlining incorporation processes with no fees and facilitating easy listing are vital steps. Key decisions include the removal of additional customs and regulatory duties, phasing out SRO-based exemptions within three years, and eliminating tariff cascading.
Export subsidies should be contingent on performance, while corporate exporters could benefit from tax incentives tied to export values.