Monday, July 15, 2024

FPCCI Criticizes Increased FBR Powers, Warns of Business Impact

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has raised concerns about the “excessive powers” granted to the Federal Board of Revenue (FBR), claiming that the government’s decision could hurt business activities.

FPCCI President Atif Ikram Sheikh stated on Friday that instead of giving more power to the FBR, the government should address the lack of trust the public and business community have in the tax body.

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Speaking at a post-budget news conference, Sheikh said the budget for the fiscal year 2024-25 is “not business friendly” and that the new measures will “discourage exports and local business activities.”

Sheikh criticized the government’s approach, saying, “We cannot move in circles. The government is giving too much power to FBR, it can even take help from intelligence agencies to arrest business people considered defaulters by FBR.” He added that those accused by the tax body are not even granted bail.

According to Sheikh, these measures will deter investments, which is why no foreign investors are entering Pakistani markets despite multiple Memorandums of Understanding (MoUs) with other countries. He mentioned that the FPCCI has always offered to help the government expand the tax base and increase revenue from other sources, but received no response from the authorities. “Instead, the decision has always been to increase tax rates and empower the FBR.”

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Budget 2024-25: Govt Announces Substantial Hike in Petroleum Levy

 

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Ahmed Chinoy noted that giving more power to the FBR and other authorities “has always opened new avenues of corruption.” He explained that government departments often “blackmail” businesses, forcing them to pay less tax in exchange for “deals” with officials. Chinoy also pointed out that the government has not focused on FBR reforms through digitization or reducing the discretionary powers of its officers.

Other FPCCI officials noted that the revenue collection target has been raised by 38 percent without any clear direction, placing more burden on the salaried class with higher taxes. Ahmed Waheed, the FPCCI tax committee coordinator, stated that the government is targeting those who are already heavily taxed. He mentioned that while government employees’ salaries have been increased, it is difficult for private sector employers to do the same due to current economic conditions, leading to reduced fiscal space for private sector employees.

Mian Zahid Hussain criticized the government’s increased expenses despite its questionable productivity. He also noted that no targets have been set to offload loss-making state-owned enterprises, and even those departments that have been shut down will remain under government control.

The speakers concluded that punitive measures against non-filers, such as travel bans and higher duties on essential commodities like petrol, diesel, food, and mobile phones, will only lead to capital and human resource flight from the country.

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