KARACHI: President Karachi Chamber of Commerce & Industry (KCCI), Muffasar Atta Malik, has urged the federal government to refrain from taking anti-business steps and devise the strategies in the larger interest of the country and the policies must strictly be finalized in consultation with true representatives of the business and industrial community.
He said that any attempt to implement the controversial Section 165 and Section 165-A of the Income Tax Ordinance will be totally rejected by the business and industrial community of Karachi as both these sections allow the Federal Board of Revenue (FBR) to gain access to bank accounts’ information which, if given, would only pave way for harassment and bribery whereas no major breakthrough will be achieved in terms of broadening the tax base.
Referring to a meeting of Tax Reforms Implementation Committee held under the Chairmanship of Special Assistant to Prime Minister Haroon Akhter recently in Islamabad, Muffasar Malik said that the meeting reviewed the possibility of taking serious action against commercial banks for their continuous refusal to provide information about their accountholders.
“We, the business and industrial community of Karachi, fully appreciate and support commercial banks’ reasonable reluctance to give online access to information of accountholders as they (the banks) rightly fear that the sensitive information will be misused,” he added.
Muffasar Malik was of the opinion that access to accountholders’ details will open flood gates of corruption where corrupt tax officials will start minting money by carrying out under the table deals.
Muffasar said that under Section 165 of the Income Tax Ordinance, banks are bound to share the details of tax collected from a person including his Computerized National Identity Card number and the value of transactions whereas under Section 165-A, the banks are also bound to provide the FBR online access to their central database containing details of the accountholders but, fortunately, they have not met the legal requirements since 2013 when the amendment was introduced in the law otherwise, the FBR officers would have used this info as a tool to harass and blackmail the business and industrial community in order to gain personal benefits.
He advised the State Bank of Pakistan and Pakistan Banking Association not to succumb to the pressure being created by the federal government as access to such a sensitive information would further discourage the business and industrial community to maintain their funds in local commercial banks and the situation may result in flight of substantial amount of capital from the country, plunging the country into deep economic crisis.
President KCCI said, “By giving access to accountholders’ info, the efforts to document the businesses will be backtracked as it would encourage cash economy which already picked up a lot of pace after the imposition of withholding tax on banking transactions.”
Referring to 0.4 percent tax being levied by the Federal Government on any banking transaction above Rs. 50,000, Muffasar Malik recalled that the then Governor SBP Ashraf Mehmood Wathra, during his last visit to Karachi Chamber in March 2017, informed that the federal government had agreed to double the minimum limit from Rs. 50,000 to Rs. 100,000 for levying the additional withholding tax which will come into force after the announcement of next budget.
“The announcement was widely acclaimed by KCCI members who attended the meeting but unfortunately, no relief was provided in the federal budget and the unjust withholding tax on a mere amount of Rs. 50,000 remains enforce to date which has to be enhanced to at least Rs. 100,000 or above,” he added.
Instead of penalizing the existing taxpayers and raising the number of indirect taxes, the government should take action against tax evaders, Muffasar Malik advised, adding that FBR claims of maintaining complete database of tax evaders and identified more than 800,000 tax evaders long time ago but neither the details of these tax evaders were made public nor any action was initiated which highlights the inefficiency and incompetence of the FBR.
“These tax evaders continue to live luxurious lives, use credit cards and frequently fly abroad but don’t pay any taxes while the loyal taxpayers are constantly overburdened and harassed due to unbridled discretionary powers and discriminate taxation policies devised as such to target the business and industrial community of Karachi only,” opined Muffasar Malik.