Page 45 - The Pakistan Accountant January-March 2018_Neat

Given the potential of GB in tourism, minerals, gemstones as well as being the threshold for China Pakistan Economic Corridor (CPEC) in Pakistan, the importance of revenue generation through taxation cannot be overestimated. of GB reportedly paid Rs. 6 billion on account polishing centers shall be established in the of sales tax and Rs. 830 million on account of region thus accounting for the wastage of income taxes annually. product in GB which was otherwise not put to use. Taxation is an inevitable part of any economy yet alone a robust one and a As you read this, the federal government self-sufficient system of governance. GB had has suspended the GB Council which will not become used to not paying income taxes only give more autonomy to the provincial for six decades and it would have been legislative assembly but might also pave understandingly difficult to persuade people way for FBR to launch system of Income to pay. With a non-coherent applicability, Tax in GB under a constitutional umbrella lack of remedies and abstinence of the from the National Assembly of Pakistan fulfillment of the universal social contract, but that is a long shot ahead. Confusion this system was heading for a crash. still exists whether in letter the powers of The federal government has announced the Council shall confer upon ministry of suspension of the previous adaptability act Kashmir Affairs or the legislative assembly. till further legislation. Moreover, GB shall be given observer status in the Council of common interest, Being an advocate of payment of taxes National Finance Commission and Indus despite the political status, I am anxiously River Systems Authority. Till that time, the awaiting the would-be legislation. It will be provincial assembly has to step in building disappointing if things are carried forward consensus and bridging the gap between from the last day of the previous bill being the federation and the masses while applicable. Taxation should never be taken suggesting viable options to the federal as collection of sums of money without government as well as tabling reservations providing the tax payer any avenues for of the people in terms of a constitutional lawful reliefs and remedies. Rebates and setup which will in turn build confidence in reduction in tax liability should be available the system. The federal revenue collection to any citizen of the country irrespective of should be undertaken by the FBR and any their domicile as the earlier act taxed two other intermediary or a provisional set up individuals in the same office in the same as existing till the dissolution of the GB slab differently on account of their origin Council will only lead to poor controls on of birth which resulted in resentment from revenue collection and a defacto system employees hailing from other provinces of which not only a silo to rest of the country Pakistan. Moreover, this legislation shall have but also shall be lethargic and inefficient. more support from the people of GB if the For first few years of implementation, the constitution of Pakistan is either extended federal government should introduce GB to the province or a set-up similar to Azad specific tax-credits and rebates to local Jamu and Kashmir is established or any other small businesses for certain period of time way forward which addresses the concerns to incentivise filing of returns. The last of the patriot masses of GB. Currently, the adaptation act strangely gave reliefs only to status quo viz-a-viz the provincial status shall salaried individuals while local businesses be maintained and without constitutional had no tax relief apart from fruit processing cover the taxation adaptation might as well units which was already provided for by the quell yet another series of protests. federal Finance Acts. Small and medium enterprises are the back bone of any Given the potential of GB in tourism, economy and concessions would go a long minerals, gemstones as well as being the way in widening the tax net of the country threshold for China Pakistan Economic even if by an iota. Corridor (CPEC) in Pakistan, the importance of revenue generation through taxation Contrary to the belief in rest of the country, cannot be overestimated. Sales tax on GBians want to pay taxes and the popular services, being a provincial subject, can earn demand in GB is representation in the billions in revenue for the region from where parliament and other federal institutions of trillion dollars’ worth of imports and exports the country thus waiting to be recognised of China will pass. This is just the tip of the as constitutional citizens of Pakistan. The iceberg as more foreign direct investment federal government should pay heed to shall come to the region and small and constitutional representation without medium businesses shall spring in huge compromising the issue of Kashmir. quanta. The various fruits including cherries, apricots, apples and grapes shall make way into national as well as international market The writer is a chartered accountant due to better infrastructure as a result of working as deputy director Finance in CPEC. Fruit processing and gems cutting and a development sector organisation, Gilgilt. January - March 2018 The Pakistan Accountant 43