ISLAMABAD: Retaliating against lawmakers who have made concessions to traders and prevented the tax body from operating, the Federal Board of Revenue (FBR) announced on Friday that it will raise property valuations to nearly 90% of market values in order to collect an extra Rs70 billion in revenue for the upcoming fiscal year.
The impact of increased property values is expected to be around Rs 30 billion of the Rs 70 billion total. The remaining Rs 40 billion is expected to be collected through higher withholding taxes on the revised valuations and new withholding tax rates.
Senator Farooq H. Naek of the Pakistan Peoples’ Party (PPP) made the property value declaration during a meeting of the Senate Standing Committee on Finance, endorsing the government’s plan to slap 10% sales tax on newspapers.
“The government should tax newspapers because no one reads them anymore,” Naek stated, adding that since the government needed money, taxes on newsprint were appropriate.In the budget, the government imposed a 10% general sales tax (GST), which will hurt a struggling industry even though it may only bring in $400 million in income.
According to Mir Badsha Khan Wazir, Member Operations of the FBR, during the committee meeting, starting in July, property assessments will be increased by the FBR from the average of 75% of market prices to 90%.Property values in specific localities are set by the federal government in order to collect the withholding tax. Prior to the current budget, property sales and purchases from tax return filers were subject to a 3% income tax .The rates for non-filers were 10.5% for purchases and 6% for sales.
The government raised tax rates on filers and non-filers in the budget, but they also created a third category of late filers a description meant to make it easier for those who consistently fail to submit taxes to pay a reduced rate and complete a transaction.During the committee meeting, there were a lot of heated exchanges between the FBR personnel, the committee members, and the representatives of the business sector who were harmed by the incorrect taxing policy.
The head of the opposition in the Senate, Senator Shibli Faraz, said, “The way the government is increasing taxes on the salaried class, these people would be compelled to steal things.Pakistan’s problem is the bankers-turned-finance ministers, who know nothing about the economy,” said Faraz, taking a swipe at the FBR and Finance Minister Muhammad Aurangzeb”.Faraz claimed that despite Aurangzeb’s background as a banker, he lacked economic knowledge.
The opposition leader claimed that since the current tax laws did not reward integrity, it was financially unfeasible to become a filer and that the only way to survive was to continue not filing.Amna Faez Bhatti, Member Policy Inland Revenue of the FBR, questioned, “Why did the government back down from the compulsory condition of Computerized National Identity Card (CNIC) after a few months?”
She also questioned the past governments’ pitiful FBR spending. Her comments mirrored the FBR’s dissatisfaction with the minimal amount of money less than 1% of overall tax revenue that was allocated to development and human resources.In an effort to document the economy in 2019, the Pakistan Tehreek-e-Insaf (PTI) administration removed the requirement for daily purchases of more than Rs50,000 to obtain a CNIC.
But many of the FBR’s activities also go against the documentation push; for example, it raised the sales tax on purchases made by the big retail stores that are connected with the FBR from 15% to 18%. Retail brand owner IDEAS, Ziad Bashir, stated, “Only 5% of the retail sector is registered with the FBR and it is now going after the 5% by completely ignoring the undocumented 95%.”
According to him, the enterprises that are linked with the FBR have been subject to a continuous rise in sales tax, which became more painful when the government raised the tax rate from 9% to 12% earlier.The majority of committee members and stakeholders disagreed with the FBR’s member policy, which held that the tax was being collected from consumers and should not be a concern for the sellers.
According to Bashir, the registered and integrated firms pay approximately 60% in sales tax, income tax, and super tax, as opposed to the 95% of unregistered retailers who pay zero taxes.”Why would shoppers bother about the fancy shops when clothes can be bought from the unregistered buyers at much cheaper rates?” PTI Senator Mohsin Aziz remarked.
The FBR’s member policy, however, stood firm, contending that raising the tax rate on branded stores by 3% should not be up for debate in a nation where the government was compelled to impose an 18% sales tax on bottled milk.
