PBC’s vision for transforming Pakistan’s economy

The Pakistan Business Council (PBC), an advocate for sustainable fiscal reforms, has identified a pivotal truth: a thriving economy begins with sound fiscal strategies.

Country’s premier business advocacy forum has championed a shift from taxing businesses to empowering them, envisioning a system where fiscal policy promoted investments, job creation, exports, and sustainable growth.

This was not merely a tax-to-GDP strategy but a holistic approach to elevate the economy.

The PBC’s recommendations included reducing corporate taxes for listed companies, eliminating excessive super taxes, and incentivizing indigenization.

They emphasized modernizing enforcement with tools like Radio Frequency Identification Device (RFID) tagging and fuel marking to combat smuggling while addressing inequities by taxing luxury real estate, revising salaried tax rates, and restructuring GST for broader compliance.

Highlighting digitization, PBC proposed a National Tax Authority (NTA) to simplify processes, restore exporter incentives, and ensure fair refunds, fostering trust, fairness, and competitiveness in global markets.

Council also maintained recommendations to broaden the tax base:

Discourage non-Filers

- Ban the use of credit cards for foreign transactions by non-filers.

- Impose 39% advance tax on non-filer utility bills and disconnect services if not registered.

Increase Documentation

- Trace withholding tax deductions on payments made by the formal sector (e.g., suppliers, landlords) to identify new taxpayers.

- Use Radio Frequency Identification Device (RFID) tags on transit trade cargo to improve tracking and transparency.

- Introduce fuel-marking dyes to distinguish legitimate petroleum products from smuggled ones.

Rationalize Real Estate Taxation

- Gain on land sales to tax at 39% if sold within 10 years; apply a reduced 15% rate after 10 years.

- Collect advance tax on the purchase and sale of land in housing societies.

- Adjust FBR valuations of immovable properties to reflect actual market values and to discourage parking of black money in the real estate sector.

Combat Tax Evasion

- Limit car registrations to 10 vehicles per person to reduce misuse.

- Prevent deregistration of taxpayers for at least 5 years to avoid exploitation of lower tax rates.

Encourage Retailer Compliance

- Reduce sales tax to 14% for retailers integrated with POS systems to incentivize registration.

- Relaunch the ‘POS Prize Scheme’ to encourage customers to demand tax invoices.

Modernize the Tax System

- Promote cashless transactions by encouraging retailers to accept debit/credit card payments.

- Reduce ‘further sales tax’ of 4% to combat the practice of flying invoices.

Improve Accountability

- Mandate wealth reconciliation for all tax filers.

- Strengthen mechanisms to penalize tax officers for deliberate misapplication of tax laws.

These recommendations aim to formalize the economy, expand the taxpayer base, and combat tax evasion and smuggling while fostering transparency and fairness in the system.

PBC’s advocacy marks a crucial chapter in Pakistan’s economic journey—a fight not merely for revenue but for the nation’s future, driven by a vision of fiscal policies that empower businesses, promote equitable growth, and enable every citizen to contribute to a shared prosperity.