Administrative reforms are essential in the tax system: President PCJCCI

Lahore, September 08, 2016 (PPI-OT): President Pak- China Joint Chamber of Commerce and Industry, Shah Faisal Afridi presided over a high level meeting with the executive committee members of PCJCCI, the meeting recommended to revise Pakistan’s tax reforms at the pattern of Chinese Taxation model.

Faisal Afridi was of the view that administrative reforms are essential in the tax system and attention should be paid to re-designing of tax recovery system. Faisal Afridi also gave a briefing on the proposed tax reforms roadmap based on the Chinese Taxation model. Senior Advisor PCJCCI, Mr. Wang Zihai and Mr. Xiao, and concerned officials were also present in the meeting.

Afridi told that China had undergone a splendorous Community development on the bases of its Taxation Reforms and Pakistan can make a paradigm shift to have a business friendly taxation system by following Chinese taxation reforms. They made Taxation central to the economic development agenda and community development goals; he added and informed that China had employed Taxes as the principal means to transfer resources from private to public use.

He informed that in Pakistan only 0.3pc of the population pays income tax and files a tax return — one of the lowest ratios in the world. Around 7 million Pakistanis are estimated to be eligible to pay income tax, but only less than 0.5 million do, said Afridi.

He regretted that the prevailing taxation system is a source of harassment for the business community and a way of corruption. Referring to the Chinese model of taxation system, President PCJCCI told “China, the socialist state has fulfilled the needs of society from cradle to grave. Child care, education, job placement, housing, subsistence, health care, and elder care are largely provided and administered through state-owned enterprises, said Afridi. He told that particularly the reform of value-added tax had boosted China’s service sector and change its position as the “world’s factory. He said that VAT reform was designed to replace business tax in manufacturing sector to protect the tax revenue of local governments.

Afridi told that Tax is a by-product of growth and the government should concentrate on growth that would automatically increase taxes. For this we need a new tax model. He asserted that like China Pakistan should also set some realistic community development goals based on Tax revenue rather than on Foreign aid. He said there is a need to create an optimal balance between a tax regime that is business and investment friendly, while at the same time leveraging enough revenue for public service delivery (which, in turn, makes economies more attractive to investors).

He said that erratic taxation, continuously destroying existing businesses and discouraging new investments, must be dispensed away if we have to grow economically. The sole stress on meeting revenue targets through highhandedness has created an anti-business climate, added Afridi.

The members also expressed that once equity and fairness in the tax system has been demonstrated by the state, enforcement as well as compliance will dramatically improve. They maintained that the increase in direct income tax from those who can afford to pay should pave the way for a significant reduction in reliance on indirect taxation of the poor and less affluent. These measures will set the stage for a modern, progressive and equitable taxation system.

For more information, contact:
Wardah Ali Gohar
Media Manager
Pakistan China Joint Chamber of Commerce and Industry (PCJCCI)
Mega Tower, 309 – 6th Floor,
Main Boulevard, Gulberg II,
Lahore, Punjab – Pakistan
Tel: +92-42-35777460-02, +92-42-37032203, +92-42-35874353
Fax: +92-42-35777524
Cell: +92-324-4925611