APBF condemns the new 0.6% tax on banking instruments worth over Rs.50, 000
The All Pakistan Business Forum (APBF) is a vibrant business association which promotes and protects the interests of the business community and industry. Responding to the Senate’s recent decision to impose a new 0.6 percent withholding tax on all banking instruments, valued at over Rs.50,000; the President of APBF – Mr. Ibrahim Qureshi has criticized this new tax as an unnecessary burden, which will be very detrimental for the already weak business and trade activity in the country. It would surely hike up inflation by increasing the operational costs of business communities and the small industry, who are already suffering great hurdles.
Recently, the Senate’s Standing Committee on Finance and Revenue has supported the imposition of 0.6 percent with-holding tax on all banking instruments valued at over Rs.50,000, for non-filers of returns. The committee discussed the federal budget 2015-16 and agreed to impose a 0.3% tax on all banking transactions for tax filers and 0.6% for non-filers over Rs.50,000 per transaction. Besides cash withdrawals, these tax rates would be applicable on demand draft, pay orders, SDRs, CDRs, STDR, call deposit receipt and RTCs.
Commenting on the new tax, the President of APBF said; “Although, the APBF fully supports the government’s efforts to expand the tax net and inspires its thousands of members to pay taxes and file their returns, however the business community has serious concerns against such indirect taxation, which is certainly not advisable for low-income economies like ours, where the common citizens are financially over-burdened. Imposition of such indirect taxes in Pakistan will severely discourage financial activities through banks and regulated institutions. The common man will be inclined towards avoiding this tax, by using the unregulated and illegal financial channels. This will result in big revenue losses for the government.
It is more advisable to create healthier revenue streams for the government, by formulating more direct taxation, to specifically target big tax-evaders, wealthy segments and high-profiteering enterprises with annual incomes exceeding Rs.50 million. The government should also consider reducing the GST on electricity to nurture small industries and businesses.
Mr. Ibrahim Qureshi demanded the federal government to refrain from imposing this withholding tax and work towards providing relief to the industry and ultimately to the common man. Statistics show that only 791,000 individuals filed their tax returns in FY14, out of a population of 180 million people in Pakistan. This shows a really dismal picture, however it does not mean that the government can flog the poor man to pay for the rich man’s offenses. The government on one hand proclaims to be aware of the poor man’s plight and pledges to make every effort to control inflation, but on the other hand it is imposing such harsh new levies. Several trade associations and the business community are contemplating a protest strike on 7th July, 2015, against such unfair taxation.