Punjab: Post Budget Seminar

LAHORE, The Regional Tax Office (RTO) Lahore has claimed to collect over Rs 20 million during the last six months from unregiestered major restaurants located in main commercial areas of the capital city through effective revenue monitoring following the ‘u/s 40B action’ against the restaurants.

Institute of Cost and Management Accountants of Pakistan (ICMAP) organized seminar on Post Budget 2011-12 at Lahore. Chief Guest Mr. Ansar Javed, Chief Commissioner Income Tax Inland Revenue Lahore, Shahzad Ahmad Awan Member National Council of ICMAP, Mr. Abdul Razzaq Member of tax committee Lahore chamber of commerce (LCCI), Mian Muhammad Ramzan Tax Consultant and FCMA, Zia ul Mustafa Awan Hon. Secretary Institute of Cost and Management Accountants of Pakistan (ICMAP), Aamir Ijaz Khan Chairman Lahore Branch Council, Mr. Muhammad Yasin Secretarty Lahore Branch Council and Mr. Abid Lateef Lodhi Vice Chairman Lahore Branch Council made presentations on the occasion. Ansar Javed, Chief Commissioner Income Tax Inland Revenue said the Post Budget Seminars play an important role in mobilizing public opinion to frame suggestions for assisting the Governments in change of national budgets. ICMAP has always been very active in this area. The suggestions put forward by the Cost and Management Accountants have usually proven very useful for us. I put on record my appreciation for the assistance provided by you as and when required. Pakistan has long been experiencing recessionary trends.

Our cash strapped position caused by massive national debt has kept our economy at very low ebb. By increasing revenues and exports we could have salvaged the position, but things have never gone the way we have been planning. The ground reality is that we usually find it difficult to generate enough revenue and increase exports whereas the expenditure position has all along been getting inflated due to inflationary trends. Talking about the revenue collection target of Rs 1,952 billion, Ansar Javed said that the target is realistic and made on the basis of Rs 1,580b, while some Rs 280 billion would come through nominal growth of 18 per cent and rest of the revenue would be generated through administrative measures. He was of the view that FBR would face Rs 27 billion shortfall, as in case of relief given and revenue generation measures for the upcoming financial year. He said that FBR is aiming to collect more than Rs 50 billion due to the administrative measures in the department including Rs 25 billion from audit of withholding agents. The government is expecting to generate Rs 81 billion through taxation measures taken in March that including elimination of tax exemptions of fertilizers, pesticides and others, he maintained.

He was of the view that FBR is expecting that pending cases in the courts would resolve soon as cases worth of Rs 131 billion in pending. It is worth mentioning here that the government has fixed revenue target at Rs 1,952 billion for the upcoming financial year against the revised target of Rs 1,588 billion for outgoing financial year. The break-up of Rs 1,952 billion revealed that, Rs 743.60 billion would come through direct taxes against Rs 626.90 billion of the outgoing year and Rs 1330.58 billion as indirect tax against Rs. 1,05246b of the year 2010-11. The break-up of indirect taxes shows that Rs 206.40 billion is estimated through customs duty against Rs 173.30 billion, Rs 836.70 billion as sales tax against Rs 654.60 billion, Rs 165.60 billion as Federal Excise Duty against Rs 132.90 billion, Rs 120 billion as petroleum levy against Rs 90 billion, Rs 1.81 billion as other taxes against Rs 1.59 billion and Rs 75 million as airport tax against the Rs 71 million of the outgoing fiscal year. Mr. Shahzad Ahmad Awan Member National council of ICMAP argued the budget was full of presumptive taxes and the unjust policy of relying on indirect taxation had continued over the past nine years. The Federal Budget is prepared in accordance with the Budgeting & Accounting Classification System (ACS) as approved by the GOP as integral part of the new accounting model.

A new budget preparation method, called the oOutput Based Budgeting has been introduced which represents the Federal Budget by Services and effects of services on target population link with Performance Indicators & Targets over the three years period. Hon. Secretary Institute of Cost and Management Accountants of Pakistan (ICMAP) Zia ul Mustafa Awan said PakistanIs tax setup was more pro-rich than pro-poor. Resultantly, the rich paid less tax than they should and poor were compelled to pay taxes in spite of the fact that they had a very low capacity to pay. Member Tax Committee Lahore Chamber of Commerce and Industry (LCCI) Abdul Razzaq said the most tax efficient form to do business, other than individual, was the creation of an association of persons (AOP) because the starting rate in case of AOP was 0.5% with exemption limit of Rs. 100,000. Due to these incentives, the growth rate of AOP’s was 60.6% in tax year 2009.On the basis of this growth rate, the focused person of the budget 2010-11 was AOP. AOP was targeted in four ways. First a flat tax rate 25% was proposed. Second exemption limit of Rs. 100,000 was abolished.

Third in case of loss, a minimum tax 1% of turnover was postponed on those AOP’s was postponed to pay advanced tax. On the other hand it is claimed by the government that all persons with an income level of up to Rs. 300,000 are exempt from tax. During Post Budget Seminar held at ICMAP Lahore, Mian Muhammad Ramzan, FCMA labeled the indirect taxation regime against the economic principles and against principles of equality. He added that due to failure of tax collecting machinery, for the last many years, Govt. has been collecting tax revenues through indirect taxes as short cut measures. Even more than 50% of Income Tax is being collected through withholding tax regime, a form of indirect taxation, which is against the basic principles of direct taxation. Imposing indirect taxation means that taxing all equally which should not the motive of any welfare state. The unscrupulous system of the govt. has been failed to collect tax revenues from the potential taxpayers that why trying to shift it towards indirect taxes. The indirect taxation increases the inflation, undue burden on the community and increases the prices of the commodities

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